Living the American Dream in Finland: The Social Mobility of Inventors∗

In this paper we merge individual census data, individual patenting data, and individual IQ data from Finnish Defence Force to look at the probability of becoming an innovator and at the returns to invention. On the former, we find that: (i) it is strongly correlated with parental income; (ii) this correlation is greatly decreased when we control for parental education and child IQ. Turning to the returns to invention, we find that: (i) inventing increases the annual wage rate of the inventor by a significant amounts over a prolonged period after the invention; (ii) coworkers in the same firm also benefit from an innovation, the highest returns being earned by senior managers and entrepreneurs in the firm, especially in the long term. Finally, we find that becoming an inventor enhances both, intragenerational and intergenerational income mobility, and that inventors are very likely to make it to top income brackets.