The Rise of American Ingenuity: Innovation and Inventors of the Golden Age

We examine the golden age of U.S. innovation by undertaking a major data collection exercise linking inventors from historical U.S. patents to Federal Censuses between 1880 and 1940 and to regional economic aggregates. We provide a theoretical framework to motivate the micro- and macro-level stylized facts we uncover in the data. We show that inventors were highly educated and that father’s income and education were important intergenerational transmission channels. Inventors tended to migrate to places that were conducive to innovation, and they were positively selected through exit early in their careers. New inventors received more patent citations than incumbent inventors, suggesting a cycle of creative destruction. The financial returns to technological development were high. At the macro level we identify a strong relationship between patented inventions and long-run economic growth and use an instrumental variables approach exploiting an historical shift in innovation activity during World War II to show that this relationship could be causal. Finally, we document a U-shaped relationship between top income inequality and innovation, yet innovative places tended to be more socially mobile. Our new data help to address important questions related to innovation and long-run growth dynamics.