There is plenty of evidence for market failures that motivate government intervention for innovation in general and research and development (R&D) in particular. R&D subsidies are a policy tool of major importance - both in theory and practice. The empirical evidence for the effectiveness of R&D...

Why is invention strongly positively correlated with parental income not only in the US but also in Finland which displays low income inequality and high social mobility? Using data on 1.45M Finnish individuals and their parents, we find that: (i) the positive association between parental income...