Working Paper

This paper investigates the heterogeneous effects of public R&D spillovers on firm productivity across sectors and firm characteristics. Using micro-level firm data from 1950 to 2020 with a shift-share IV approach, I find that: (1) a 1% increase in public R&D spillovers raises value added per worker by 1.51% in manufacturing but only 0.33% in the services sector; and (2) larger, older, and more R&D-intensive firms, as well as firms in more concentrated markets and high-tech industries, benefit disproportionately from public R&D spillovers.

I interpret these findings to indicate that the allocation of public R&D resources may not have fully aligned with structural change, potentially contributing to the productivity slowdown as the services sector appears less able to leverage public R&D spillovers.