Does interacting with others contribute to human capital accumulation? We try to answer this question by using a novel panel dataset on European inventors matched to their employers. Our panel data comes from the European Patent Offices since the 1980s and contains information on inventors, their employers, and their patents. More interactions are very strongly correlated with higher subsequent productivities of inventors, as measured by their number and quality of patents. Using variation in labor market regulations and flexibility across sectors, countries and time as instruments, we document a causal link between interactions and productivity or human capital accumulation of inventors.
