London School of Economics
Institutional Affiliation: London School of Economics
NBER Working Papers and Publications
|January 2019||Do Tax Cuts Produce More Einsteins? The Impacts of Financial Incentives vs. Exposure to Innovation on the Supply of Inventors|
with Alexander M. Bell, Raj Chetty, Neviana Petkova, John Van Reenen: w25493
Many countries provide financial incentives to spur innovation, ranging from tax incentives to research and development grants. In this paper, we study how such financial incentives affect individuals' decisions to pursue careers in innovation. We first present empirical evidence on inventors' career trajectories and income distributions using de-identified data on 1.2 million inventors from patent records linked to tax records in the U.S. We find that the private returns to innovation are extremely skewed – with the top 1% of inventors collecting more than 22% of total inventors' income – and are highly correlated with their social impact, as measured by citations. Inventors tend to have their most impactful innovations around age 40 and their incomes rise rapidly just before they have hi...
|September 2018||Quasi-Experimental Shift-Share Research Designs|
with Kirill Borusyak, Peter Hull: w24997
Many empirical studies leverage shift-share (or “Bartik”) instruments that combine a set of aggregate shocks with measures of shock exposure. We derive a necessary and sufficient shock-level orthogonality condition for these instruments to identify causal effects. We then show that orthogonality holds when observed shocks are as-good-as-randomly assigned and growing in number, with the average shock exposure sufficiently dispersed. We recommend that practitioners implement quasi-experimental shift-share designs with new shock-level regressions, which help visualize identifying shock variation, correct standard errors, choose appropriate specifications, test identifying assumptions, and optimally combine multiple sets of quasi-random shocks. We illustrate these points by revisiting Autor et...
|November 2017||Who Becomes an Inventor in America? The Importance of Exposure to Innovation|
with Alexander M. Bell, Raj Chetty, Neviana Petkova, John Van Reenen: w24062
We characterize the factors that determine who becomes an inventor in the United States, focusing on the role of inventive ability (“nature”) vs. environment (“nurture”). Using deidentified data on 1.2 million inventors from patent records linked to tax records, we first show that children's chances of becoming inventors vary sharply with characteristics at birth, such as their race, gender, and parents' socioeconomic class. For example, children from high-income (top 1%) families are ten times as likely to become inventors as those from below-median income families. These gaps persist even among children with similar math test scores in early childhood – which are highly predictive of innovation rates – suggesting that the gaps may be driven by differences in environment rather than abili...
Published: Alex Bell & Raj Chetty & Xavier Jaravel & Neviana Petkova & John Van Reenen, 2019. "Who Becomes an Inventor in America? The Importance of Exposure to Innovation*," The Quarterly Journal of Economics, vol 134(2), pages 647-713.