Patents, Firm Rents, and Worker Compensation: Causal Evidence from Quasi-Random Patent Allocation

This paper provides new causal evidence on how patent allowances affect firms and their employees based on quasi-random assignment of patent applications to examiners. Exploiting employer–employee records with newly linked German firm data and web-scraped patent documents, it shows that patent-induced shocks reduce firm exit, improve productivity, and increase wages, with rent-sharing elasticities between 0.10 and 0.21. Wage gains are broadly observed across occupational tasks, with substantial heterogeneity: managers benefit dispro portionately in publicly traded firms, whereas broader wage increases accrue to workers in non-traded firms. The findings highlight the role of institutional features and firm organiza tion in shaping how rents are shared.

Alam, Afroza and André Diegmann (2026), Patents, Firm Rents, and Worker Compensation: Causal Evidence from Quasi-Random Patent Allocation, ZEW Discussion Paper No. , Mannheim.