Patents, Pay and People: How Innovation Reshapes the Workforce

Çiğdem Ekiz, Eren Gürer and Erol Taymaz
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Çiğdem Ekiz: RS: GSBE MGSoG, Maastricht Graduate School of Governance

No 13, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: We examine how innovation shapes firm-level workforce dynamics using rich administrative data from Turkiye, a developing economy characterized by medium-technology, incremental innovation. We find that patent-based innovation increases both firm size and average daily wages, with the largest employment gains among workers earning just above the median wage. To uncover the mechanisms behind these outcomes, we construct worker transition matrices. Relative to comparable non-innovative firms, innovative firms (i) retain incumbent workers at higher rates, particularly at the top of the wage distribution, (ii) promote retained workers into higher wage bins more frequently, and (iii) hire more new workers, disproportionately into higher wage bins. Finally, occupational composition analysis shows that employment growth is concentrated among technical and production occupations, consistent with the medium-technology, incremental nature of innovation in our sample.

Keywords: innovation; patents; wages; employment; worker transitions; human resources (search for similar items in EconPapers)
JEL-codes: J21 J31 O15 O30 O31 (search for similar items in EconPapers)
Date: 2026-09-16
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2026013

DOI: 10.53330/MAES5026

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