Shedding Light on Inventors' Returns to Patents
39 Pages Posted: 4 Mar 2015
Date Written: November 2014
We estimate individual returns to patents using a unique longitudinal administrative dataset on patents and earnings, following individuals and firms for 20 years (1987-2006). We find that inventors' wages steadily increase before patent applications are submitted to the European Patent Office, reach a peak around the time of submission and then decrease again. We also find that the applications that will eventually lead to a granted patent receive a greater wage increase than those that will not. Finally, we use an event study framework to distinguish among inventor-types and we find that the "star-inventors" (the employees submitting at least three times in their life) receive a lasting wage premium, while the employees with one or two submissions stop receiving the premium after the application date, in line with the "unobserved ability" literature.
Keywords: Patents; Wages, Incentives, Inventors, Performance pay, Return
JEL Classification: O31, J31
Suggested Citation: Suggested Citation