Haste Makes Waste? Quantity-Based Subsidies under Heterogeneous Innovations

Speaker: 曹林谊（上海财经大学高等研究院 助理教授）

Time/Date: 2023年5月23日（周二）12:00-13:00

Classroom：同济大厦A楼505室

Tencent Room: 392507628

PW: 995743

Abstract: 

With quantity-based innovation targets and subsidy programs launched since the mid-2000s, China has seen a patent surge, accounting for 46% of the world’s total patent applications in 2020; however, the overall patent quality has been declining after 2008. This paper develops a Schumpeterian growth model featuring innovating firms’ quantity-quality trade-off between radical and incremental innovations, and decomposes subsidies’ aggregate impact into quantity and quality channels. We calibrate the model to Chinese firm-level data in the early 2010s. Our quantitative analysis shows that the quality channel effects are negative and dominant, and quantity-based subsidies in that period reduce the TFP growth rate and welfare by 0.19 percentage points and 3.31%, respectively. We evaluate welfare gains under a constrained planner’s problem, and propose skill subsidies which are quality-biased and effectively recover the optimal allocation.

Bio: 

曹林谊，圣路易斯华盛顿大学经济学博士，主要研究领域为宏观经济学、经济增长和企业创新等。