Events

Prof. Marta Prato
Assistant Professor
Department of Economic
Bocconi University

This paper studies how individuals sort into entrepreneurship and invention-related occupations and how their interactions shape innovation and economic growth. We develop an endogenous growth model in which occupational sorting jointly deter-mines the supply of R&D talent and entrepreneurs’ demand for it. Empirically, using Danish microdata, we show that transformative entrepreneurs—those who hire R&D workers—tend to have higher IQ and education and build faster-growing firms than other entrepreneurs. Quantitatively, the estimated model indicates that financial barriers to education misallocate talent; alleviating them through educa-tion subsidies increases both demand and supply of R&D workers, raising innova-tion and long-run growth. Broad startup subsidies are ineffective.