Patents, firm rents, and worker compensation: Causal evidence from quasi-random patent allocation

Afroza Alam and André Diegmann

No 26-022, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

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, it shows 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 substantial heterogeneity: managers benefit dispro portionately in publicly traded firms, whereas broader wage increases accrue to workers in non-traded firms. The findings highlight the role of institutional features and firm organiza tion 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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