Educational diversity and knowledge transfers via inter-firm labor mobility

• Interactions with educationally diverse co-workers promote learning opportunities.
• Hiring workers from educationally diverse enterprises is productivity enhancing.
• This effect is larger when worker flows originate from knowledge intensive firms.
• This effect is stronger if movers have a higher capacity for absorbing knowledge.

This article contributes to the literature on knowledge transfer via labor mobility by providing new evidence regarding the role of educational diversity in knowledge transfer. In tracing worker flows between firms in Denmark over the period 1995–2005, we find that knowledge carried by workers who have been previously exposed to educationally diverse workforces significantly increases the productivity of the hiring firms. Several extensions of our baseline specification support this finding and confirm that our variable of interest affects the arrival firm's performance mainly through the knowledge transfer channel.