1500 Pennsylvania Ave
Washington, DC 20220
Institutional Affiliation: U.S. Department of the Treasury
NBER Working Papers and Publications
|January 2019||Do Tax Cuts Produce More Einsteins? The Impacts of Financial Incentives vs. Exposure to Innovation on the Supply of Inventors|
with Alexander M. Bell, Raj Chetty, Xavier Jaravel, John Van Reenen: w25493
Many countries provide financial incentives to spur innovation, ranging from tax incentives to research and development grants. In this paper, we study how such financial incentives affect individuals' decisions to pursue careers in innovation. We first present empirical evidence on inventors' career trajectories and income distributions using de-identified data on 1.2 million inventors from patent records linked to tax records in the U.S. We find that the private returns to innovation are extremely skewed – with the top 1% of inventors collecting more than 22% of total inventors' income – and are highly correlated with their social impact, as measured by citations. Inventors tend to have their most impactful innovations around age 40 and their incomes rise rapidly just before they have hi...
|November 2018||Who Profits from Patents? Rent-Sharing at Innovative Firms|
with Patrick Kline, Heidi Williams, Owen Zidar: w25245
This paper analyzes how patent-induced shocks to labor productivity propagate into worker compensation using a new linkage of US patent applications to US business and worker tax records. We infer the causal effects of patent allowances by comparing firms whose patent applications were initially allowed to those whose patent applications were initially rejected. To identify patents that are ex-ante valuable, we extrapolate the excess stock return estimates of Kogan et al. (2017) to the full set of accepted and rejected patent applications based on predetermined firm and patent application characteristics. An initial allowance of an ex-ante valuable patent generates substantial increases in firm productivity and worker compensation. By contrast, initial allowances of lower ex-ante value pat...
|November 2017||Who Becomes an Inventor in America? The Importance of Exposure to Innovation|
with Alexander M. Bell, Raj Chetty, Xavier Jaravel, John Van Reenen: w24062
We characterize the factors that determine who becomes an inventor in the United States, focusing on the role of inventive ability (“nature”) vs. environment (“nurture”). Using deidentified data on 1.2 million inventors from patent records linked to tax records, we first show that children's chances of becoming inventors vary sharply with characteristics at birth, such as their race, gender, and parents' socioeconomic class. For example, children from high-income (top 1%) families are ten times as likely to become inventors as those from below-median income families. These gaps persist even among children with similar math test scores in early childhood – which are highly predictive of innovation rates – suggesting that the gaps may be driven by differences in environment rather than abili...