observation of and interaction with other workers/firms. Knowledge spillovers are typically understood as a flow of knowledge from one entity to another ( Ramadani et al. 2017 ). It is a process of the transmission of knowledge to others beyond the intended boundaries ( Fallah and Ibrahim 2004 ) and represents the external benefits from the creation of knowledge, accruing to parties other than the creator ( Agarwal et al. 2010 , Hur 2017 ). In this study we examine knowledge spillovers of former Nokia employees that were hired by other Finnish firms. We argue that Nokia
necessarily represent the views of the IMF, its Executive Board, or IMF management. I. ABSTRACT Do workers hired from superstar tech-firms contribute to better firm performance? To address this question, we analyze the effects of tacit knowledge spillovers from Nokia in the context of a quasi-natural experiment in Finland, the closure of Nokia’s mobile device division in 2014 and the massive labor movement it implied. We apply a two-stage difference-in-differences approach with heterogeneous treatment to estimate the causal effects of hiring former Nokia employees. Our
percent between 1989–1994. In 2008–2010, close to 48 percent of the employees leaving Nokia joined a firm that is greater than 11 years old, suggesting an absence of a great shift towards innovative activity in young startups. We may observe a reversal of trend since 2010, but will have to wait for newer data to become available to confirm this conjecture. Outflows of Nokia Employees (conditional on remaining in private sector employment) (Share of Total Outflows) Sources and Notes: OECD, Pajarinen and Rouvinen (2013) in ETLA Reports No 10, Finland
affect 4,700 ex-Nokia employees in Finland, or about 0.2 percent of the labor force. Another structural challenge is the decline of the wood and pulp industry resulting from the contraction in the global demand for paper. The question therefore is whether Finland has an environment conducive to the required adjustment that will continue to foster innovation and entrepreneurship outside past patterns and would help the economy to rebound. Shares of Gross Value Added (Percent of gross value added) Sources: Statistics Finland and Fund staff calculations