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Returns to Inventors

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  • Toivanen, Otto
  • Väänänen, Lotta

Abstract

A key input to inventive activity is human capital. Hence it is important to understand the monetary incentives of inventors. We estimate the effect of patented inventions on individual earnings by linking data on U.S. patents and their inventors to Finnish employer-employee data. Returns are heterogeneous: Inventors get a temporary reward of 3% of annual earnings for a patent grant and for highly-cited patents a longer-lasting premium of 30% in earnings three years later. Similar medium-term premia accrue to inventors who initially hold the patent rights, although they forego earnings at the time of the grant.

Suggested Citation

  • Toivanen, Otto & Väänänen, Lotta, 2010. "Returns to Inventors," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 309, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    • Handle: RePEc:trf:wpaper:309
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    Cited by:

    1. Oscar Mauricio Valencia, 2014. "Endogenous Growth and Research Activity under Private Information," Borradores de Economia 12169, Banco de la Republica.
    2. Claire Bonnard, 2011. "Les incitations à l'innovation dans le secteur privé," Post-Print halshs-00599700, HAL.
    3. Jose E. Gomez-Gonzalez & Oscar Mauricio Valencia, 2014. "Innovation and Growth under Private Information," Borradores de Economia 845, Banco de la Republica de Colombia.
    4. Karin Hoisl & Myriam Mariani, 2017. "It’s a Man’s Job: Income and the Gender Gap in Industrial Research," Management Science, INFORMS, vol. 63(3), pages 766-790, March.
    5. Otto Toivanen & Lotta Väänänen, 2016. "Education and Invention," The Review of Economics and Statistics, MIT Press, vol. 98(2), pages 382-396, May.

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    More about this item

    Keywords

    citations; effort; incentives; inventors; intellectual property; patents; performance pay; return; wages;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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