Does Workplace Discrimination Impede Innovation?

Abstract

We identify a negative causal effect of workplace discrimination on corporate innovation, using the staggered adoption of U.S. state employment laws that prohibit discrimination based on sexual orientation and gender identity. We find a significant increase in patents and patent citations for firms headquartered in states that pass such laws relative to firms headquartered in states that do not. This result is more pronounced for firms that previously have not implemented pro-gay non-discrimination policies, for firms in states with a large homosexual population, and for firms in human capital-intensive industries. Overall, our findings support the view that inclusion inspires innovation.

Keywords: Innovation; Patents; Workplace Discrimination; Anti-discrimination Law; Sexual Orientation

JEL Classification: O31; J24; K31; M14