Regional Economics Commons^™

State Incentives For Innovation, Star Scientists, And Jobs: Evidence From Biotech, Enrico Moretti, Daniel J. Wilson

Upjohn Institute Working Papers

We evaluate the effects of state-provided financial incentives for biotech companies, which are part of a growing trend of placed-based policies designed to spur innovation clusters. We estimate that the adoption of subsidies for biotech employers by a state raises the number of star biotech scientists in that state by about 15 percent over a three-year period. A 10 percent decline in the user cost of capital induced by an increase in R&D tax incentives raises the number of stars by 22 percent. Most of the gains are due to the relocation of star scientists to adopting states, with limited …