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Economy

Why Gay-Friendly Places Are More Innovative

Non-discrimination policies appear to increase productivity, especially for firms that rely on human capital.
Employees of Facebook march in the annual NYC Pride parade in New York.
Employees of Facebook march in the annual NYC Pride parade in New York.Brendan McDermid/Reuters

Policy issues related to LGBT inclusiveness remain a hot-button in many parts of the United States. I should know, I’ve felt the heat: My finding that more tolerant and gay-friendly metro areas also have higher rates of innovation and high-tech industry generated a firestorm of criticism, unlike anything I’ve ever experienced.

Adding to this analysis is a detailed new study by the economists Huasheng Gao and Wei Zhang, published in the journal Management Science, which finds that companies in more gay-friendly states are actually significantly more innovative. Specifically, it finds the rate at which companies patent is higher in states with laws that prohibit discrimination based on sexual preference of gender identity.