Recent decades have seen a slowdown in productivity growth and a decline in economic dynamism across advanced economies.
In Australia, these trends are reflected in low rates of business formation, technology adoption and job switching (Andrews and Hansell 2019; Quinn 2019).
Productivity growth depends not only on generating new ideas, but on how quickly those ideas spread through the economy – through commercialisation and the movement of skilled people.
At a glance
- Innovation rewards workers, not just intellectual property owners: After a firm receives its first domestic patent grant, its employees receive on average a 3% wage premium, controlling for individual and firm characteristics.
- Commercialisation skills are critical and valued: Lower skill-level workers capture a larger relative wage boost than higher skill-level workers when their firm is granted its first patent.
- Early contributors capture a return when the innovation succeeds: High-skill incumbent workers see the largest wage premium.
- Patents shape hiring that underpins firm commercialisation and growth: The patent grant sees new hiring of lower skill-level workers at higher wages.
- Small patentees are key sources of knowledge spillovers: Hiring from small patent-holding firms increases a firm's patenting by a rate 4 times larger than new hires from large patent-holding firms.
- Outbound mobility is also a pathway for gaining knowledge: Innovation increases when employees depart, but only when they join small patent-holding firms.
The study shows that patents matter not only for firms, but for Australian workers and the innovation system as a whole.
Employees earn higher wages after their employer patents, especially those in roles more likely to be involved in commercialisation. Hiring and job switching between patent-active firms is a predictor of further patenting, particularly where small innovators are involved.