Brown Bag Seminar Industrial Economics

This paper provides novel evidence of patent-induced shocks on firm survival, growth, and productivity, and how innovation shocks impact worker compensation and employment prospects. Using linked employer-employee data with newly linked German firm data and web-scraped patent documents, we leverage quasi-random assignment of patent applications to examiners. Patent allowance reduces market exit and increases firm productivity. This induces positive wage responses. On average, workers capture roughly 50 cents of every euro increase in revenue. Wage gains are strongest for lower-wage jobs, in particular for administrative staff and skilled and unskilled manual and service employees. We present evidence that this result is likely driven by institutional features and the organizational structure of firms.

(joint with Afroza Alam)