Patent Protection, Technological Change and Wage Inequality

Shiyuan Pan, Heng-Fu Zou () and Tailong Li
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Shiyuan Pan: School of Economics and Center for Research of Private Economy, Zhejiang University
Tailong Li: School of Economics & Management, Zhejiang Sci-Tech University

No 437, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: We develop a directed-technological-change model to address the issue of the optimal patent system and investigate how the optimal patent system influences the direction of technological change and the inequality of wage, where patents are categorized as skill- and labor-complementary. The major results are: (i) Finite patent breadth maximizes the social welfare level; (ii) Optimal patent breadth increases with the amount of skilled (unskilled) workers; (iii) Optimal patent protection is skill-biased, because an increase in the amount of skilled workers increases the dynamic benefits of the protection for skill-complementary patents via the economy of scale of skill-complementary technology; (iv) Skill-biased patent protection skews inventions towards skills, thus increasing wage inequality; And, (v) international trade leads to strong protection for skill-complementary patents, hence increasing skill premia.

Keywords: Patent Breadth; Skill-Biased Patent Protection; Skill-Biased Technological Change; Wage Inequality; Growth (search for similar items in EconPapers)
JEL-codes: J31 O31 O34 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-08-14
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pr~ and nep-lab
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