Is Distance from Innovation a Barrier to the Adoption

We investigate whether online vacancies for jobs requiring Artificial Intelligence (AI) skills grow more slowly in U.S. locations farther from AI innovation hotspots. To define hotspots, we create a geocoded dataset of all AI publications (journal articles, conference proceedings and patents) through 2020, while we obtain the job vacancy information from online job advertisements scraped by Burning Glass Technologies from 2007–2019. We define hotspots based on the cumulative number of AI publications by 2006. We find that a hotspot’s AI publications increasingly affect other commuting zones’ AI vacancies as the hotspot publication threshold grows to 300, a threshold met by 11% of commuting zones. A 10% greater distance from such a hotspot (about a standard deviation) reduces a commuting zone’s growth in AI jobs’ share of job advertisements by 2-3% of median growth. The effect is almost entirely due to the one third of job advertisements posted by employment agencies, for which the industry is not known, but we do measure a small effect due to advertisements posted directly by financial firms. We also show that distance is a barrier to the posting of vacancies involving AI applications. The results suggest that for a minority of firms, distance from innovation is a moderate barrier to the adoption or adaptation of technology. The extent to which geographic distance is a barrier to technological knowledge transfer is of interest to governments of countries distant from centers of innovation; to entrepreneurs deciding where to locate a new firm that will need to remain abreast of technological developments; and to national or local policy–makers seeking to influence the decisions of such entrepreneurs. These agents may value knowledge transfer as an input to further innovation, or as a prerequisite for the adoption of innovative practices. In this paper, we provide insight into a new aspect of the latter, by examining the geography of U.S. firms’ adoption of Artificial Intelligence (AI) in response to AI innovation. The importance of distance for the diffusion of innovation has received considerable attention. Despite the longstanding availability of the telephone and modern means of transportation, personal contact is hypothesized to be important for stimulating innovation. This could take the form of an inventor interacting with a potential inventor at another firm or university, which is more likely to happen if the two people work or live in physical proximity. A more indirect effect of distance is easier to test: that inventors diffuse innovation by moving themselves, either to another firm in the same location or to another location. Distance is then a barrier because distance is a barrier to migration. If physical mobility is central to the diffusion of innovation, distance could persist as a barrier even as widespread email and video conferencing have reduced the cost of communication. The importance of inventors’ moving has been demonstrated empirically, and while there has been some debate, the empirical evidence overall supports the hypothesis that distance is a barrier to the diffusion of innovation between inventors. A related literature examines the adoption of technology, often across countries. One hypothesis is that it is advantageous for a potential adopter of a technology to be proximate to an earlier adopter because this makes adoption less risky: the later adopter 1 For within–country firm to firm moves see Agrawal, Cockburn and McHale (2006); Rahko (2017); and Sonmez (2017). For international moves see Kerr (2008); Briggs (2016); and Bahar, Choudhury and Rapoport (2020). 2 For analysis of patents, see Henderson, Jaffe and Trajtenberg (1991, 2005); Keller (2004); Peri (2005) Blit and Packalen (2018); Ganguli, Lin and Reynolds (2019); and Bernard, Moxnes and Saito (2020). Thompson and Fox–Kean (2005) have a contrary view. Singh and Marx (2013) find political borders, including those within countries, to be larger barriers than distance itself. For analysis of country R&D as a proxy for innovation, see Keller (2002) and papers in Keller’s (2004) survey.