NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Technological Innovation, Resource Allocation, and Growth

Leonid Kogan, Dimitris Papanikolaou, Amit Seru, Noah Stoffman

NBER Working Paper No. 17769
Issued in January 2012
NBER Program(s):   AP   CF   EFG   ME   PR

We explore the role of technological innovation as a source of economic growth by constructing direct measures of innovation at the firm level. We combine patent data for US firms from 1926 to 2010 with the stock market response to news about patents to assess the economic importance of each innovation. Our innovation measure predicts productivity and output at the firm, industry and aggregate level. Furthermore, capital and labor flow away from non-innovating firms towards innovating firms within an industry. There exists a similar, though weaker, pattern across industries. Cross-industry differences in technological innovation are strongly related to subsequent differences in industry output growth.

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Document Object Identifier (DOI): 10.3386/w17769

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