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Innovation and Top Income Inequality

Ufuk Akcigit (), Richard Blundell (), David Hemous, Antonin Bergeaud () and Philippe Aghion

No 1115, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: In this paper we use cross-state panel data to show a positive and significant correlation between innovativeness and top income inequality in the United States over the past decades. Our instrumentation at cross-state level suggests that this correlation (partly) reflects a causality from innovativeness to top income inequality. Next, using cross commuting zones (CZ) data, we show that innovativeness is positively and significantly correlated with social mobility, and that this correlation is driven mainly by entrant innovators and less so by incumbent innovators. In addition, the positive effects of innovation on the top 1% income share and on social mobility are both dampened in states with higher lobbying intensity. Overall, our findings are in line with the Schumpeterian view whereby the rise in top income shares in developed countries and particularly in the US over the past decades, is at least partly related to innovation-led growth, where innovation itself fosters social mobility at the top through the process of creative destruction.

New Economics Papers: this item is included in nep-gro, nep-ino, nep-ltv and nep-tid
Date: 2015
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https://economicdynamics.org/meetpapers/2015/paper_1115.pdf (application/pdf)

Related works:
Journal Article: Innovation and Top Income Inequality (2019) Downloads
Working Paper: Innovation and Top Income Inequality (2019)
Working Paper: Innovation and Top Income Inequality (2015) Downloads
Working Paper: Innovation and Top Income Inequality (2015) Downloads
Working Paper: Innovation and Top Income Inequality (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:1115

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