Living “American Dream” in Finland: The Social Mobility of Inventors (with U. Akcigit, P. Aghion and A. Hyytinen)
Abstract:
Innovation
is a key human activity behind economic growth: Understanding the allocatio
n of talent, and potential barriers of allocation, into innovation is there
fore important. We study what determines who becomes an inventor, and the l
evel and distribution of innovation rents. We use rich data on family backg
round and IQ on 700K Finnish males to study who becomes an inventor, and si
milar data on almost 400K Finnish males to study the level and distribution
of innovation rents. We find that parental income matters for becoming an
inventor, but less than parental education and own IQ, and less than for be
coming a medical doctor (MD) or a lawyer. Visuospatial IQ is more important
for becoming an inventor than either an MD (not scalable, unlike invention
) or a lawyer (rent-seeking). Own education is an order of magnitude more i
mportant than any family background variable or IQ. We find that becoming a
n inventor leads an individual to increase her rank substantially in the in
come distribution, and to severe the link to father’s income. The latter ef
fect is larger for invention than either high education or IQ. In ongoing w
ork we are studying the effects on coworkers of inventors.