Many studies use matched employer-employee data to estimate a statistical model of earnings determination with worker and firm fixed effects. Estimates based on this model have produced influential yet controversial conclusions. The objective of this paper is to assess the sensitivity of these conclusions to the biases that arise because of limited mobility of workers across firms. We use employer-employee data from the US and several European countries while taking advantage of both fixed-effects and random-effects methods for bias-correction. We find that limited mobility bias is severe and that bias-correction is important.
Who Profits from Patents? Rent-Sharing at Innovative Firms*
Abstract This article analyzes how patent-induced shocks to labor productivity propagate into worker compensation using a new linkage of U.S. patent applications to U.S. business and worker tax records. We infer the causal effects of patent allowances by comparing firms whose patent applications were initially allowed to those whose patent applications were initially rejected. To identify patents that are ex ante valuable, we extrapolate the excess stock return estimates of Kogan et al. (2017) to the full set of accepted and rejected patent applications based on predetermined firm and patent application characteristics. An initial allowance of an ex ante valuable patent generates substantial increases in firm productivity and worker compensation. By contrast, initial allowances of lower ex ante value patents yield no detectable effects on firm outcomes. Patent allowances lead firms to increase employment, but entry wages and workforce composition are insensitive to patent decisions. On average, workers capture roughly 30 cents of every dollar of patent-induced surplus in higher earnings. This share is roughly twice as high among workers present since the year of application. These earnings effects are concentrated among men and workers in the top half of the earnings distribution and are paired with corresponding improvements in worker more »
- Award ID(s):
- 1752431
- Publication Date:
- NSF-PAR ID:
- 10133724
- Journal Name:
- The Quarterly Journal of Economics
- Volume:
- 134
- Issue:
- 3
- Page Range or eLocation-ID:
- 1343 to 1404
- ISSN:
- 0033-5533
- Sponsoring Org:
- National Science Foundation
More Like this
-
-
Abstract Using U.S. Census firm-worker data, I document that firms’ financial distress has an economically important effect on employee departures to entrepreneurship. The impact is amplified in the high-tech and service sectors, where employees are key assets. In states with enforceable noncompete contracts, the effect is mitigated. Compared to typical entrepreneurs, distress-driven entrepreneurs are high-wage workers who found better firms, as measured by jobs, pay, and survival. Startup jobs compensate for 33% of job losses at the constrained incumbents. Overall, the financial inability of incumbent firms to pursue productive opportunities increases the reallocation of economic activity into new firms.
-
Abstract
Firms do not continue and prosper purely on their own individual endeavors, as each firm is influenced by the activities of others, and thus direct and indirect relationships shape the firm’s strategic management. These relationships form the tactics by which knowledge and other strategically important resources are accessed and created. Forming and maintaining ties among members of a network have been the subject for numerous research studies in the social, economic, and business literature. Our work is framed by the resource-based view of the firm perspective along with social capital theory and its shared constructs in network theory. Prior findings suggest that networking ties are strategic actions generated for firm growth and continuance. The ties may be short-term or develop into long-term relationships. The purpose of this research is to fill some of the gaps in interorganizational networking strategy by analyzing five antecedents that have been suggested in the literature as individually associated with entrepreneurs’ engagement in network ties. In this way, our work provides another research avenue for examining networking’s contribution to strategic management. We hypothesized positive connections to entrepreneurs’ engagement in network ties from antecedents involving the firm’s knowledge absorptive capacity, business goals, entrepreneurial orientation, social interactions, -
We study the optimal design of corporate taxation and R&D policies as a dynamic mechanism design problem with spillovers. Firms have heterogeneous research productivity, and that research productivity is private information. There are non‐internalized technological spillovers across firms, but the asymmetric information prevents the government from correcting them in the first best way. We highlight that key parameters for the optimal policies are (i) the relative complementarities between observable R&D investments, unobservable R&D inputs, and firm research productivity, (ii) the dispersion and persistence of firms' research productivities, and (iii) the magnitude of technological spillovers across firms. We estimate our model using firm‐level data matched to patent data and quantify the optimal policies. In the data, high research productivity firms get disproportionately higher returns to R&D investments than lower productivity firms. Very simple innovation policies, such as linear corporate taxes combined with a nonlinear R&D subsidy—which provides lower marginal subsidies at higher R&D levels—can do almost as well as the unrestricted optimal policies. Our formulas and theoretical and numerical methods are more broadly applicable to the provision of firm incentives in dynamic settings with asymmetric information and spillovers, and to firm taxation more generally.
-
PURPOSE: Firms do not continue and prosper purely on their own individual endeavors, as each firm is influenced by the activities of others, and thus direct and indirect relationships shape the firm’s strategic management. These relationships form the tactics by which knowledge and other strategically important resources are accessed and created. Forming and maintaining ties among members of a network have been the subject of numerous research studies in the social, economic, and business literature. Our work is framed by the resource-based view of the firm perspective along with social capital theory and its shared constructs in network theory. Prior findings suggest that networking ties are strategic actions generated for firm growth and continuance. The ties may be short-term or develop into long-term relationships. The intent of this research is to fill some of the gaps in interorganizational networking strategy by analyzing five antecedents that have been suggested in the literature as individually associated with entrepreneurs’ engagement in network ties. In this way, our work provides another research avenue for examining networking’s contribution to strategic management. We hypothesized positive connections to entrepreneurs’ engagement in network ties from antecedents involving the firm’s knowledge absorptive capacity, business goals, entrepreneurial orientation, social interactions,more »
- Free Publicly Accessible Full Text
-
Accepted Manuscript1.0
- Publisher's Version of Record
- https://doi.org/10.1093/qje/qjz011
