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

Depalo, Domenico and Di Addario, Sabrina Lucia, Shedding Light on Inventors' Returns to Patents (November 2014). Centro Studi Luca d'Agliano Development Studies Working Paper No. 375. Available at SSRN: or

Domenico Depalo

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184

Sabrina Lucia Di Addario (Contact Author)

Bank of Italy ( email )

Via 20 settembre, 97/e
00187 Rome, I - 00184
+39 06 4792 3458 (Phone)
+39 06 4792 5626 (Fax)


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