Innovation and Inequality: World Evidence

Nikos Benos () and Georgios Tsiachtsiras

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we use country panel data to explore the effect of innovation on top income inequality. We construct a novel dataset of patents by combining patents from USPTO and EPO to test the effect of innovation on income inequality. We demonstrate that innovation has a strong positive correlation with top income shares. Also, we find weak evidence that innovation has a negative effect on overall income inequality. We support our findings by using instrumental variables to tackle endogeneity. In addition our IV analysis shows that the effect of innovation on top income shares remains significant for 3 years. Finally, we show that innovation has a less strong effect on top income inequality when we include defensive patents in the analysis.

Keywords: top income inequality; overall inequality; innovation; citations; defensive patents (search for similar items in EconPapers)
JEL-codes: D63 O30 O31 O33 O34 O40 O47 (search for similar items in EconPapers)
Date: 2018-09-27
New Economics Papers: this item is included in nep-gro, nep-ino, nep-ipr, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:89217

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