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Where Have All the "Creative Talents" Gone? Employment Dynamics of US Inventors

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  • Akcigit, Ufuk
  • Goldschlag, Nathan

Abstract

How are inventors allocated in the US economy and does that allocation affect innovative capacity? To answer these questions, we first build a model of creative destruction where an inventor with a new idea has the possibility to work for an entrant or incumbent firm. If the inventor works for the entrant the innovation is implemented and the entrant displaces the incumbent firm. Strategic considerations encourage the incumbent to hire the inventor, offering higher wages, and then not implement the inventor’s idea. To test this prediction, we combine data on the employment history of over 760 thousand U.S. inventors with information on jobs from the Longitudinal Employer-Household Dynamics (LEHD) Program at the U.S. Census Bureau. Our results show that (i) inventors are increasingly concentrated in large incumbents, less likely to work for young firms, and less likely to become entrepreneurs, and (ii) when an inventor is hired by an incumbent, compared to a young firm, their earnings increases by 12.6 percent and their innovative output declines by 6 to 11 percent. We also show that these patterns are robust and not driven by life cycle effects or occupational composition effects.

Suggested Citation

  • Akcigit, Ufuk & Goldschlag, Nathan, 2023. "Where Have All the "Creative Talents" Gone? Employment Dynamics of US Inventors," CEPR Discussion Papers 18035, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:18035
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    Cited by:

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    2. Karam Jo & Seula Kim, 2024. "Competition, Firm Innovation, and Growth under Imperfect Technology Spillovers," Working Papers 24-40, Center for Economic Studies, U.S. Census Bureau.
    3. Bräuer, Richard, 2024. "Searching where Ideas Are Harder to Find – The Productivity Slowdown as a Result of Firms Hindering Disruptive Innovation," IWH Discussion Papers 22/2023, Halle Institute for Economic Research (IWH), revised 2024.
    4. Kox, Henk L.M., 2023. "Testing an extended knowledge-capital model of foreign direct investment," MPRA Paper 117266, University Library of Munich, Germany.

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    More about this item

    Keywords

    Inventors;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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