A Year Older, A Year Wiser (and Farther from Frontier): Invention Rents and Human Capital Depreciation

Abstract We look at how the arrival of an invention affects wage returns and the probability of moving out of employment for white- and blue-collar co-workers of the inventor. First results suggest that older workers are hurt by the arrival of an invention. This negative effect disappears when we control for education and, in particular, for the time since obtaining the last formal degree, that is, distance to human capital frontier. If anything, this effect is slightly higher for non-STEM than STEM-educated co-workers. This result suggests that retraining programs could be helpful in making the process of creative destruction and economic growth more inclusive.