IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v152y2025ics0264999325002500.html

How do labor supply dynamics influence patent protection policies?

Author

Listed:
  • Kushwaha, Rudra Narayan
  • Ghosh, Taniya

Abstract

This study investigates how labor supply dynamics influence patent policies. In many countries, labor supply growth has shifted from positive to declining or even negative trends, potentially affecting economic growth and, consequently, the effectiveness of patent protection. This is because research and development entrepreneurs-key drivers of growth-are primarily drawn from the labor force. Using a panel of 50 countries from 1998 to 2017, we empirically establish a significant relationship between patent protection and labor supply. We then employ an overlapping generations economy with variety expansion to identify the growth-maximizing level of patent protection. Our findings suggest that in countries with positive (negative) labor supply growth, the growth-maximizing level of patent protection should be tightened (may remain fully enforced or be tightened further) as labor supply growth declines. Therefore, in the face of declining labor supply growth, governments should either tighten or fully enforce patent protection.

Suggested Citation

  • Kushwaha, Rudra Narayan & Ghosh, Taniya, 2025. "How do labor supply dynamics influence patent protection policies?," Economic Modelling, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:ecmode:v:152:y:2025:i:c:s0264999325002500
    DOI: 10.1016/j.econmod.2025.107255
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999325002500
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2025.107255?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LLC, vol. 3(1), pages 1-31, March.
    2. Bucci, Alberto, 2023. "Can a negative population growth rate sustain a positive economic growth rate in the long run?," Mathematical Social Sciences, Elsevier, vol. 122(C), pages 17-28.
    3. Ken Tabata, 2015. "Population Aging and Growth: the Effect of PAYG Pension Reform," Discussion Paper Series 125, School of Economics, Kwansei Gakuin University, revised Jan 2015.
    4. Furukawa, Yuichi, 2007. "The protection of intellectual property rights and endogenous growth: Is stronger always better?," Journal of Economic Dynamics and Control, Elsevier, vol. 31(11), pages 3644-3670, November.
    5. Ai-Ting Goh & Jacques Olivier, 2002. "Optimal Patent Protection in a Two-Sector Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1191-1214, November.
    6. Lee, Grace H.Y. & Parasnis, Jaai, 2014. "Discouraged workers in developed countries and added workers in developing countries? Unemployment rate and labour force participation," Economic Modelling, Elsevier, vol. 41(C), pages 90-98.
    7. Christopher Laincz & Pietro Peretto, 2006. "Scale effects in endogenous growth theory: an error of aggregation not specification," Journal of Economic Growth, Springer, vol. 11(3), pages 263-288, September.
    8. Chu, Angus C. & Cozzi, Guido & Galli, Silvia, 2012. "Does intellectual monopoly stimulate or stifle innovation?," European Economic Review, Elsevier, vol. 56(4), pages 727-746.
    9. Diwakar, Bharat & Sorek, Gilad & Stern, Michael, 2021. "Patents And Growth In Olg Economy With Physical Capital," Macroeconomic Dynamics, Cambridge University Press, vol. 25(2), pages 489-508, March.
    10. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
    11. Papageorgiadis, Nikolaos & Sofka, Wolfgang, 2020. "Patent enforcement across 51 countries – Patent enforcement index 1998–2017," Journal of World Business, Elsevier, vol. 55(4).
    12. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    13. Tatsuro Iwaisako & Koichi Futagami, 2003. "Patent Policy in an Endogenous Growth Model," Journal of Economics, Springer, vol. 78(3), pages 239-258, March.
    14. Kwan, Yum K. & Lai, Edwin L. -C., 2003. "Intellectual property rights protection and endogenous economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 27(5), pages 853-873, March.
    15. Chu, Angus C. & Pan, Shiyuan & Sun, Minjuan, 2012. "When does elastic labor supply cause an inverted-U effect of patents on innovation?," Economics Letters, Elsevier, vol. 117(1), pages 211-213.
    16. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    17. Angus C. Chu, 2022. "Patent policy and economic growth: A survey," Manchester School, University of Manchester, vol. 90(2), pages 237-254, March.
    18. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    19. Ken Tabata, 2015. "Population Aging and Growth: The Effect of Pay-as-You-Go Pension Reform," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 71(3), pages 385-406, September.
    20. Theo S. Eicher & Monique Newiak, 2013. "Intellectual property rights as development determinants," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(1), pages 4-22, February.
    21. Cysne, Rubens P. & Turchick, David, 2012. "Intellectual property rights protection and endogenous economic growth revisited," Journal of Economic Dynamics and Control, Elsevier, vol. 36(6), pages 851-861.
    22. Hwan C. Lin, 2015. "Creative Destruction and Optimal Patent Life in a Variety‐Expanding Growth Model," Southern Economic Journal, John Wiley & Sons, vol. 81(3), pages 803-828, January.
    23. Joakim Westerlund, 2005. "New Simple Tests for Panel Cointegration," Econometric Reviews, Taylor & Francis Journals, vol. 24(3), pages 297-316.
    24. Keith E. Maskus, 2000. "Intellectual Property Rights in the Global Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 99, October.
    25. Charles I. Jones, 2022. "The End of Economic Growth? Unintended Consequences of a Declining Population," American Economic Review, American Economic Association, vol. 112(11), pages 3489-3527, November.
    26. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/generalized method of moments estimation and testing," Stata Journal, StataCorp LLC, vol. 7(4), pages 465-506, December.
    27. Michael P. Murray, 2006. "Avoiding Invalid Instruments and Coping with Weak Instruments," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 111-132, Fall.
    28. Saito, Yuki, 2017. "Effects of patent protection on economic growth and welfare in a two-R&D-sector economy," Economic Modelling, Elsevier, vol. 62(C), pages 124-129.
    29. Sasaki, Hiroaki & Hoshida, Keisuke, 2017. "The Effects Of Negative Population Growth: An Analysis Using A Semiendogenous R&D Growth Model," Macroeconomic Dynamics, Cambridge University Press, vol. 21(7), pages 1545-1560, October.
    30. Liu, Shenglong & Hu, Angang, 2013. "Demographic change and economic growth: Theory and evidence from China," Economic Modelling, Elsevier, vol. 35(C), pages 71-77.
    31. Cho, Dooyeon & Lee, Kyung-woo, 2025. "Pension sustainability and government effectiveness in the presence of population aging," Economic Modelling, Elsevier, vol. 147(C).
    32. Francisco L. Rivera-Batiz & Luis A. Rivera-Batiz, 2018. "Economic Integration and Endogenous Growth," World Scientific Book Chapters, in: Francisco L Rivera-Batiz & Luis A Rivera-Batiz (ed.), International Trade, Capital Flows and Economic Development, chapter 1, pages 3-32, World Scientific Publishing Co. Pte. Ltd..
    33. Sorek, Gilad, 2011. "Patents and quality growth in OLG economy," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 690-699.
    34. Chien-fu Chou & Oz Shy, 1993. "The Crowding-Out Effects of Long Duration of Patents," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 304-312, Summer.
    35. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    36. Zeng, Jinli & Zhang, Jie & Fung, Michael Ka-Yiu, 2014. "Patent Length And Price Regulation In An R&D Growth Model With Monopolistic Competition," Macroeconomic Dynamics, Cambridge University Press, vol. 18(1), pages 1-22, January.
    37. Gilad Sorek & Bharat Diwakar, 2017. "Weak Scale Effects in Overlapping Generations Economy," Economics Bulletin, AccessEcon, vol. 37(2), pages 962-969.
    38. Ryo Horii & Tatsuro Iwaisako, 2007. "Economic Growth with Imperfect Protection of Intellectual Property Rights," Journal of Economics, Springer, vol. 90(1), pages 45-85, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rudra Narayan Kushwaha & Taniya Ghosh, 2023. "The Effects of population growth on patents and economic growth dynamics," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2023-05, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Angus C. Chu, 2024. "Macroeconomic effects of intellectual property rights: an updated survey," Chapters, in: Walter G. Park (ed.), Handbook of Innovation and Intellectual Property Rights, chapter 2, pages 13-26, Edward Elgar Publishing.
    3. Yuta Nakabo & Ken Tabata, 2019. "An inverted-U effect of patents on economic growth in an overlapping generations model," Discussion Paper Series 191, School of Economics, Kwansei Gakuin University.
    4. Angus C. Chu, 2022. "Patent policy and economic growth: A survey," Manchester School, University of Manchester, vol. 90(2), pages 237-254, March.
    5. Noda, Hideo & Fang, Fengqi, 2025. "Pro-Patent Policy in the Knowledge-Based Economy," MPRA Paper 125646, University Library of Munich, Germany.
    6. Angus C. Chu & Yuichi Furukawa, 2013. "Patentability and Knowledge Spillovers of Basic R&D," Southern Economic Journal, John Wiley & Sons, vol. 79(4), pages 928-945, April.
    7. Chu, Angus C. & Liao, Chih-Hsing, 2025. "Optimal patent policy and wealth inequality in a Schumpeterian economy," Journal of Macroeconomics, Elsevier, vol. 83(C).
    8. Iwaisako, Tatsuro, 2020. "Welfare Effects Of Patent Protection In A Semi-Endogenous Growth Model," Macroeconomic Dynamics, Cambridge University Press, vol. 24(3), pages 708-728, April.
    9. Angus Chu & Guido Cozzi & Chih-Hsing Liao, 2013. "Endogenous fertility and human capital in a Schumpeterian growth model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(1), pages 181-202, January.
    10. Diwakar, Bharat & Sorek, Gilad & Stern, Michael, 2021. "Patents And Growth In Olg Economy With Physical Capital," Macroeconomic Dynamics, Cambridge University Press, vol. 25(2), pages 489-508, March.
    11. Reinan Ribeiro & David Turchick, 2014. "Optimal patent breadth in a horizontal innovation growth model," Working Papers, Department of Economics 2014_15, University of São Paulo (FEA-USP).
    12. Lu, You-Xun, 2022. "Interactive effects of monetary policy and patent protection: The role of endogenous innovation size," Economic Modelling, Elsevier, vol. 113(C).
    13. Lu, You-Xun & Lai, Ching-Chong, 2021. "Effects of patent policy on growth and inequality: A perspective of exogenous and endogenous quality improvements," MPRA Paper 111183, University Library of Munich, Germany.
    14. Shiyuan Pan & Mengbo Zhang & Heng-fu Zou, 2013. "The Effects of Patent Protection: A Growth Model with Status Preference," CEMA Working Papers 574, China Economics and Management Academy, Central University of Finance and Economics.
    15. Angus C. Chu & Yuichi Furukawa & Lei Ji, 2016. "Patents, R&D subsidies, and endogenous market structure in a schumpeterian economy," Southern Economic Journal, John Wiley & Sons, vol. 82(3), pages 809-825, January.
    16. Iwaisako, Tatsuro, 2023. "Optimal mix of R&D subsidy and patent protection in a heterogeneous-industry R&D-based growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 154(C).
    17. Hu, Mei-Ying & Lu, You-Xun & Lai, Ching-chong, 2023. "Patent term extensions and commercialization lags in the pharmaceutical industry: A growth-theoretic analysis," Journal of Macroeconomics, Elsevier, vol. 76(C).
    18. Shiyuan Pan & Heng-fu Zou & Tailong Li, 2010. "Patent Protection, Technological Change and Wage Inequality," CEMA Working Papers 437, China Economics and Management Academy, Central University of Finance and Economics.
    19. Suzuki, Keishun, 2020. "Patent Protection, Optimal Licensing, And Innovation With Endogenous Entry," Macroeconomic Dynamics, Cambridge University Press, vol. 24(8), pages 2033-2059, December.
    20. Shiyuan Pan & Mengbo Zhang & Heng-fu Zou, 2011. "Patent Protection, Financial Development and Economic Growth," CEMA Working Papers 589, China Economics and Management Academy, Central University of Finance and Economics.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:152:y:2025:i:c:s0264999325002500. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.