Analysis of Innovation and Inequality with Microdata

This paper investigates the effects and relationship of innovation and industry concentration on top-income inequality in various sectors. It contends that innovation plays a critical role in the rise of income inequality and that comprehending the relationship between market mechanisms and inequality is necessary for elucidating the structures that underlie these economic phenomena. The study aims to establish links between economic factors related to innovation and different types of inequality while determining possible negative impacts of innovation. The study utilizes microdata from CPS IPUMS, patents, and an existing industry concentration dataset and shows that innovation might increase top income inequality. Additionally, the paper offers a theoretical explanation of how innovation could cause top-income inequality but not in general wage inequality