The social origins of inventors

Prof. Dr. Otto Toivanen, Aalto University Business School & KU Leuven

Allocating the right individuals into jobs where spillovers are generated enhances economic growth. Using individual level data on a half million Finnish men, we study the relative importance of social origins – parental income, socioeconomic status and education – and own ability as measured by IQ, on the probability of becoming an inventor. A striking starting point is that the relation between parental income and the probability to invent in our data mirrors that in both the contemporary and historical US even though Finland is one of the most equal and socially most mobile societies. We find that the monetary resources of parents matter less than their education and that all parental characteristics are less important than own ability. Our IQ results are robust to using within-family fixed effects. Own education in turn dwarfs all other determinants, and again our results hold in within-family regressions. IQ is a key determinant in obtaining a (high) education, thus impacting on the probability to become an inventor both directly and indirectly through education. We find further that family structure matters: parental divorce reduces the probability to become an inventor, and father’s income matters less if he does not live with his son. Step-parents’ resources do not matter. Finally, we find that IQ and father’s income are complements in the sense having a high income father inreases the probability of inventing more for high IQ individuals.

About the speaker

Otto Toivanen is a professor in the Department of Economics of Aalto University Business School and the Department of Managerial Economics, Strategy and Innovation at KU Leuven. He obtained his PhD from University of Warwick (U.K.) in 1995. Before his current position he was the director of HECER, a joint venture of all economics departments in Helsinki. He has also held positions at University of Warwick and Helsinki School of Economics, and has been a visiting scholar to MIT, NBER and University of California, Berkeley. Otto Toivanen is an expert on industrial organization and economics of innovation and has published papers on topics such as economics of inventors, financing of firms, evaluation of innovation policies, and firm strategies in journals such as RAND Journal of Economics, Review of Economics and Statistics and Research Policy. He has been a member of the executive committee of the European Association for Research in Industrial Economics and an associate editor of the Journal of Industrial Economics and is a research fellow of the Center for Economic and Policy Research, Etla and ZEW. He holds or has held several positions of trust, e.g. membership of the Economic Council of the Finnish Ministry of Finance and the Economic Advisory Group for Competition Policy in DG Competition of the European Union. He has acted as a consultant for private sector firms and for public sector agencies such as the European Commission and the Finnish government.

Venue: conference room 0.16-0.17

Date: 11 May 2017

Time: 12:00 - 13:00  CET