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 allocation of talent, and potential barriers of allocation, into innovation is therefore important. We study what determines who becomes an inventor, and the level and distribution of innovation rents. We use rich data on family background and IQ on 700K Finnish males to study who becomes an inventor, and similar 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 becoming 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 important than any family background variable or IQ. We find that becoming an inventor leads an individual to increase her rank substantially in the income distribution, and to severe the link to father’s income. The latter effect is larger for invention than either high education or IQ. In ongoing work we are studying the effects on coworkers of inventors.