Returns to Inventors

Toivanen, Otto; Väänänen, Lotta (March 2010): Returns to Inventors. SFB/TR 15 Discussion Paper No. 309

Abstract

A key input to inventive activity is human capital. Hence it is important to understand the monetary incentives of inventors. We estimate the effect of patented inventions on individual earnings by linking data on U.S. patents and their inventors to Finnish employer-employee data. Returns are heterogeneous: Inventors get a temporary reward of 3% of annual earnings for a patent grant and for highly-cited patents a longer-lasting premium of 30% in earnings three years later. Similar medium-term premia accrue to inventors who initially hold the patent rights, although they forego earnings at the time of the grant.

• Item Type: Paper (Discussion Paper)
• Keywords: citations, effort, incentives, inventors, intellectual property, patents, performance pay, return, wages
• Faculties: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > C2 - Intellektuelles Eigentum, Aneignung von Innovationserträgen und Innovationswettbewerb; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > C6 - Kommunikations- und Transporttechnologien, Industrie- und Regionalstruktur
• Subjects: 300 Social sciences > 330 Economics
• Language: English