The Geography of Innovation in the United States
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A defining trend in U.S. innovation is its rising geographic concentration, exemplified by the growth of high-tech clusters such as Silicon Valley. What factors drive this rising spatial concentration, and what are its implications for regional and aggregate growth? Using comprehensive data on patents, firms, and inventors from 1976 to 2018, I find that innovation became more concentrated in high-skill regions only after 1990, with the rise of information and communication technologies (ICT) playing two distinct roles in this process. First, the sudden arrival of influential ICT breakthroughs shifted innovation toward ICT -- a sector whose production and innovation are more concentrated in high-skill regions relative to the non-ICT sector. Second, ICT-enabled reductions in communication costs allowed innovation-intensive firms based in high-skill regions to expand geographically, increase their scale, and innovate more. Worker sorting toward high-skill regions in the 1980s facilitated the growth of both the ICT sector and other innovation-intensive firms in these regions. To decompose the contribution of each mechanism to the rising spatial concentration of innovation and its implications for macroeconomic growth, I develop a spatial growth model with endogenous and directed innovation, technology diffusion, and dynamic worker mobility. The model characterizes the spatial direction of innovation along the transition path and shows how its steady-state spatial distribution shapes long-run aggregate growth.