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On the Returns to Invention within Firms: Evidence from Finland

Author

Listed:
  • Philippe Aghion

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, LSE - London School of Economics and Political Science, Collège de France - Chaire Economie des institutions, de l'innovation et de la croissance - CdF (institution) - Collège de France)

  • Ufuk Akcigit

    (University of Chicago)

  • Ari Hyytinen

    (JYU - University of Jyväskylä)

  • Otto Toivanen

    (Aalto University, KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven)

Abstract

In this paper we merge individual income data, firm-level data, patenting data, and IQ data in Finland over the period 1988–2012 to analyze the returns to invention for inventors and their coworkers or stakeholders within the same firm. We find that: (i) inventors collect only 8 percent of the total private return from invention; (ii) entrepreneurs get over 44 percent of the total gains; (iii) bluecollar workers get about 26 percent of the gains and the rest goes to white-collar workers. Moreover, entrepreneurs start with significant negative returns prior to the patent application, but their returns subsequently become highly positive.

Suggested Citation

  • Philippe Aghion & Ufuk Akcigit & Ari Hyytinen & Otto Toivanen, 2018. "On the Returns to Invention within Firms: Evidence from Finland," Post-Print halshs-01883564, HAL.
    • Handle: RePEc:hal:journl:halshs-01883564
    DOI: 10.1257/pandp.20181108
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    Cited by:

    1. Antonin Bergeaud & Clément Malgouyres & Clément Mazet-Sonilhac & Sara Signorelli, 2021. "Technological Change and Domestic Outsourcing," Working Papers halshs-03265792, HAL.
    2. Benslimane, Ismaël & Crosetto, Paolo & Magni-Berton, Raul & Varaine, Simon, 2023. "Intellectual property reform in the laboratory," Journal of Economic Behavior & Organization, Elsevier, vol. 206(C), pages 204-221.
    3. Aghion, Philippe & Bergeaud, Antonin Jean Jacob & Blundell, Richard & Griffith, Rachel, 2019. "The innovation premium to soft skills in low-skilled occupations," LSE Research Online Documents on Economics 103452, London School of Economics and Political Science, LSE Library.
    4. Philippe Aghion & Ufuk Akcigit & Antonin Bergeaud & Richard Blundell & David Hemous, 2019. "Innovation and Top Income Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 1-45.
    5. Cirera, Xavier & Martins-Neto, Antonio Soares, 2023. "Do innovative firms pay higher wages? Micro-level evidence from Brazil," Research Policy, Elsevier, vol. 52(1).
    6. Rho, Yeirae & Fabrizi, Simona & Lippert, Steffen, 2021. "Employee characteristics, absorptive capacity and innovation," MPRA Paper 106407, University Library of Munich, Germany, revised 04 Mar 2021.
    7. Jussi Heikkilä, 2019. "IPR gender gaps: a first look at utility model, design right and trademark filings," Scientometrics, Springer;Akadémiai Kiadó, vol. 118(3), pages 869-883, March.
    8. Patrick Kline & Neviana Petkova & Heidi Williams & Owen Zidar, 2019. "Who Profits from Patents? Rent-Sharing at Innovative Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1343-1404.
    9. Domini, Giacomo & Grazzi, Marco & Moschella, Daniele & Treibich, Tania, 2021. "Threats and opportunities in the digital era: Automation spikes and employment dynamics," Research Policy, Elsevier, vol. 50(7).
    10. Bhattacharya, Sourav & Chakraborty, Pavel & Chatterjee, Chirantan, 2022. "Intellectual property regimes and wage inequality," Journal of Development Economics, Elsevier, vol. 154(C).
    11. 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.
    12. Koski, Heli, 2018. "How Do Competition Policy and Data Brokers Shape Product Market Competition?," ETLA Working Papers 61, The Research Institute of the Finnish Economy.
    13. Ufuk Akcigit & John Grigsby & Tom Nicholas & Stefanie Stantcheva, 2018. "Taxation and Innovation in the 20th Century," NBER Working Papers 24982, National Bureau of Economic Research, Inc.
    14. García-Vega, María, 2022. "R&D restructuring during the Great Recession and young firms," International Journal of Industrial Organization, Elsevier, vol. 81(C).

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • 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

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