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This study explores the connection between regional labor markets, knowledge spillovers, and technological diversification in 272 European regions for 2011-2021. We find that innovation – measured as the number of patents – has a strong, positive correlation with employment. Furthermore, regions where innovation is more connected to other research via forward and backward citations tend to experience greater employment. Finally, when a region’s research is concentrated in a small number of technological fields and/or unevenly distributed across those fields, it tends towards lower employment. Finally, granular analysis finds that the effects are strongest in manufacturing, for STEM workers and highly educated workers more broadly. Thus, the most effective development strategy will likely involve not just the promotion of R&D but also greater connections with global knowledge networks and a more diverse set of technical fields.
