This paper estimates the response of state-level labor productivity to a technology shock as measured by aggregate utility patent applications. The state-level responses, estimated with a vector autoregression, have considerable spatial variation.  In some cases, such as New York, Arizona, and Illinois, the responses are significantly positive shortly after the shock. However, in other states, such as Kentucky, Oregon, and Tennessee, the productivity responses are initially negative followed by an eventual positive response within ten years. The paper also combines state level demographic, economic, and policy factors, such as population density, education, and income tax, with the cross-section of labor productivity responses to explain the differential state responses to a technology shock. The cross-sectional results indicate that high-skilled labor is important shortly after the shock, while less-skilled workers become important at the longer horizon.  Also, the results suggest that regions that are denser and more specialized, as measured by industrial diversity, tend to have a higher short-run productivity response following a technology shock.

Assessing the Link between Military Spending and Productivity: Evidence from Firm-Level Data (with Lone E. Christiansen) (Feb. 2008) [pdf]

This paper examines whether changes in military prime contract awards lead to the development of new technology and analyzes the effects on firm-level productivity. The analysis is performed using firm-level military prime contract data from the Department of Defense together with Compustat data and data from the NBER patent database in panel vector autoregressions. This allows the paper to take into account individual firm effects. Results show that firm-level productivity, research and development, and patents increase in response to a military contract award.

Defense Spending, Productivity, and Technological Change: A Regional Approach (with Lone E. Christiansen) (Feb. 2008) [pdf] 

Do changes in military spending stimulate regional technological progress and local labor productivity? Military prime contract data together with Gross Domestic Product by state, regional employment, and state-level patent statistics are used to explore this question. Through panel vector autoregressions with the 50 states and the District of Columbia, the paper finds that output and employment increase following a military spending shock, but that labor productivity only increases insignificantly. Results from the patent data show that military spending leads to the development of new technology. However, the 50 states and the district are not all affected similarly. States with relatively few military prime contract dollars per person tend to be more positively affected than traditionally large military states.