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A Year Older, A Year Wiser (and Farther from Frontier): Invention Rents and Human Capital Depreciation

Author

Listed:
  • Philippe Aghion

    (London School of Economics and Insead)

  • Ufuk Akcigit

    (University of Chicago)

  • Ari Hyytinen

    (Hanken School of Economics and Helsinki Graduate School of Economics)

  • Otto Toivanen

    (Aalto University School of Business, Helsinki Graduate School of Economics, and KU Leuven)

Abstract

We look at how the arrival of an invention affects wage returns and the probability of moving out of employment for white- and blue-collar co-workers of the inventor. First results suggest that older workers are hurt by the arrival of an invention. This negative effect disappears when we control for education and, in particular, for the time since obtaining the last formal degree, that is, distance to human capital frontier. If anything, this effect is slightly higher for non-STEM than STEM-educated co-workers. This result suggests that retraining programs could be helpful in making the process of creative destruction and economic growth more inclusive.

Suggested Citation

  • Philippe Aghion & Ufuk Akcigit & Ari Hyytinen & Otto Toivanen, 2024. "A Year Older, A Year Wiser (and Farther from Frontier): Invention Rents and Human Capital Depreciation," The Review of Economics and Statistics, MIT Press, vol. 106(4), pages 974-982, July.
    • Handle: RePEc:tpr:restat:v:106:y:2024:i:4:p:974-982
    DOI: 10.1162/rest_a_01262
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    Cited by:

    1. Philippe Aghion & Ufuk Akcigit & Ari Hyytinen & Otto Toivanen, 2023. "2022 Klein Lecture Parental Education And Invention: The Finnish Enigma," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(2), pages 453-490, May.
    2. Jarkko Harju & Toni Juuti & Tuomas Matikka, 2023. "Stairway to Heaven? Selection into Entrepreneurship, Income Mobility and Firm Performance," Working Papers 17, Finnish Centre of Excellence in Tax Systems Research.

    More about this item

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • 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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