Huasheng Gao, Po-Hsuan Hsu, Kai Li, and Jin Zhang
We identify a positive causal effect of healthy working environments on corporate innovation, using the staggered passage of U.S. state-level smoke-free laws that ban smoking in workplaces. We find a significant increase in patents and patent citations for firms headquartered in states that have adopted such laws relative to firms headquartered in states without such laws. The increase is more pronounced for firms in states with stronger enforcement of such laws and in states with weaker pre-existing tobacco controls. We present suggestive evidence that smoke-free laws affect innovation by improving inventor health and productivity and by attracting more productive inventors.