About this event
In order for innovation policy to function optimally, an increase in the demand for invention must be met with a corresponding increase in supply. In this paper we document the presence of a human capital friction that acts as a barrier to inventor mobility between technological fields, and hampers short-run inventor supply responsiveness. We build a simple model to estimate this friction and find it to be large, even between fields which are relatively close in the intellectual space. The friction increases rapidly with intellectual distance and varies widely across wider domains of knowledge application -- such as Food Chemistry and Environmental Technology. Within the environmental technology domain, we estimate the friction reduces the effectiveness of innovation policy by more than 40%. At the aggregate level, our calculations suggest the friction increased the cost of US invention by over $630 Billion between 1990 and 2015.
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