Supersedes Working Paper 04-16/R – Matching and Learning in Cities: Urban Density and the Rate of Invention

We show that patent intensity — the per capita invention rate — is positively related to the density of employment in the highly urbanized portion of MAs. All else equal, a city with twice the employment density (jobs per square mile) of another city will exhibit a patent intensity (patents per capita) that is 20 percent higher. Patent intensity is maximized at an employment density of about 2,200 jobs per square mile. A city with a more competitive market structure or one that is not too large (a population less than 1 million) will also have a higher patent intensity. These findings confirm the widely held view that the nation’s densest locations play an important role in creating the flow of ideas that generate innovation and growth.