A Year Older, A Year Wiser: Invention Rents and Human Capital Depreciation

DATE: 2022-03-01

By Philippe Aghion, Ufuk Akcigit, Ari Hyytinen & Otto Toivanen

NBER Working Paper No. 29863 (Mar 2022).

Date Published: Mar 2022


We look at how the arrival of an invention affects wage returns and probability of moving out of employment for white- and blue-collar coworkers of the inventor. First results suggest that older workers are hurt by the arrival of an invention. This negative effect disappears when we control for education and, in particular, for time that since obtaining the last formal degree, i.e., distance to human capital frontier. If anything, this effect is slightly higher for non-STEM than STEM-educated co-workers. This result suggests that retraining programs could be helpful in making the process of creative destruction and economic growth more inclusive.

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