Innovation and Human Capital Policy
This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.
Chapter in forthcoming NBER book Innovation and Public Policy, Austan Goolsbee and Benjamin Jones, editors
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.