Innovation and Human Capital Policy
If innovation is to be subsidized, a natural place to start is to act on the quantity and quality of the stock of human capital. Innovation, after all, begins with people. Simply stimulating the “demand side” through R&D tax incentives may only drive up the price, rather than the volume of research activity. However, increasing the supply of STEM human capital can both directly increase innovation and reduce its cost. This paper examines the evidence on alternative human capital policies for innovation including expanding the homegrown workforce, fostering immigration, boosting universities and reducing barriers to entry into inventor careers, especially for underrepresented groups. We argue that targeting high ability but disadvantaged potential inventors at an early age will have the largest long-run effects.
This builds on work with many co-authors, in particular Nick Bloom and Heidi Willaims. I am grateful for comments by Ben Jones and Austan Goolsbee. This research was supported in part by the Sloan Foundation; Schmitt Sciences, the Smith Richardson Foundation and the Economic and Social Research Council. The content is solely the responsibility of the author and does not necessarily represent the official views of the NBER. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.