Estimating the impacts of patents on U.S. firms and workers

Project Summary:

Innovation studies often use patents as an outcome of interest or a proxy for innovation. This project, however, focuses on the consequences of patents. By creating a new, restricted-access dataset that links patent applications to business tax records, the authors will use two quasi-experimental designs to estimate the relative effects of patent-generated monopoly rents on firm returns and worker wages. Much recent research has focused on inter-firm profitability and its relationship with inequality, and this project engages with that research to provide insights into the effects of patent rents on firm outcomes and earnings inequality. This work has the potential to help fill in our understanding of how innovation in an age of inequality may not be translating into broadly shared growth. Moreover, it provides a window into how governance and institutions (in this case, the patent and tax systems) impact innovation.


Heidi Williams is the Class of 1957 Career Development Assistant Professor in the Department of Economics at the Massachusetts Institute of Technology, and a Faculty Research Fellow at the National Bureau of Economic Research. Her research agenda focuses on investigating the causes and consequences of technological change in health care markets. She is the recipient of a MacArthur Foundation Fellowship (2015) as well as an Alfred P. Sloan Research Fellowship (2015).