This paper investigates the effect of innovation on income inequality in Sweden, which to the best of my knowledge has not been explored previously. I use data on the number of patent applications to measure innovation, while income inequality is measured as the income share that goes to the top 1% of income earners. To address potential endogeneity issues, I apply an instrumental variables approach with municipality and time fixed effects. I instrument for innovation using data on funding from Vinnova to research projects. I find persistent positive estimates of the effect of innovation on income inequality, which is in line with previous research. However, due to issues with potential bias from violated identifying assumptions and statistical significance, I am unable to say anything about the causal effect. Nonetheless, the results indicate that policymakers may need to consider balancing the benefits of innovation with potentially harmful consequences of higher degrees of income inequality. Because of this, further research is necessary for formulating effective policies to manage the trade-offs between promoting innovation and mitigating income inequality.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:uu-532531 |
| Date | January 2024 |
| Creators | Thimrén, August |
| Publisher | Uppsala universitet, Nationalekonomiska institutionen |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
Page generated in 0.1888 seconds