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Patent Protection, Technological Change and Wage Inequality: Theory

Author

Listed:
  • Shiyuan Pan

    (School of Economics and Center for Research of Private Economy, Zhejiang University)

  • Tailong Li

    (School of Economics & Management, Zhejiang Sci-Tech University)

  • Heng-fu Zou

    (Central University of Finance and Economics, CEMA
    Wuhan University IAS
    Peking University
    China Development Bank)

Abstract

We develop a directed-technological-change model to address the issue of the optimal patent system and investigate how the optimal patent system influences the direction of technological change and the inequality of wage, where patents are categorized as skill- and labor-complementary. The major results are: (i) Finite patent breadth maximizes the social welfare level; (ii) Optimal patent breadth increases with the amount of skilled (unskilled) workers; (iii) Optimal patent protection is skill-biased, because an increase in the amount of skilled workers increases the dynamic benefits of the protection for skill-complementary patents via the economy of scale of skill-complementary technology; (iv) Skill-biased patent protection skews inventions towards skills, thus increasing wage inequality.

Suggested Citation

  • Shiyuan Pan & Tailong Li & Heng-fu Zou, 2012. "Patent Protection, Technological Change and Wage Inequality: Theory," CEMA Working Papers 537, China Economics and Management Academy, Central University of Finance and Economics.
    • Handle: RePEc:cuf:wpaper:537
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    References listed on IDEAS

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    Cited by:

    1. Christian Kiedaisch, 2021. "Growth and welfare effects of intellectual property rights when consumers differ in income," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(4), pages 1121-1170, November.
    2. Angus Chu & Guido Cozzi, 2018. "Effects of Patents versus R&D subsidies on Income Inequality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 68-84, July.
    3. Sefa Awaworyi Churchill & Bin Peng & Russell Smyth & Quanda Zhang, 2022. "R&D intensity and income inequality in the G7: 1870–2016," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 263-282, July.

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    More about this item

    Keywords

    Patent Breadth; Skill-Biased Patent Protection; Skill-Biased Technological Change; Wage Inequality; Economic Growth;
    All these 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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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