Patents, Firm Rents, and Worker Compensation: Causal Evidence from Quasi-Random Patent Allocation

Afroza Alam and André Diegmann

No 12666, CESifo Working Paper Series from CESifo

Abstract: This paper provides new causal evidence on how patent allowances affect firms and their employees based on quasi-random assignment of patent applications to examiners. Exploiting employer–employee records with newly linked German firm data and web-scraped patent documents, we show that patent-induced shocks reduce firm exit, improve productivity, and increase wages, with rent-sharing elasticities between 0.10 and 0.21. Wage gains are broadly observed across occupational tasks, with high heterogeneity: managers benefit disproportionately in publicly traded firms, whereas broader wage increases accrue to workers in non-traded firms. Our findings highlight the role of institutional features and firm organization in shaping how rents are shared.

Keywords: innovation; firm performance; worker compensation; rent sharing (search for similar items in EconPapers)
JEL-codes: D22 J31 O31 O34 (search for similar items in EconPapers)
Date: 2026
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