Patents Do Not Increase Productivity

James Pethokoukis points us to this graph in the CBO’s new report on innovation. Patenting is way up but total factor productivity has barely budged. 

Boldrin, Allamand, Levine, and Ornaghi show something similar cross-sectionally, namely that the industries with the most patents are not the industries with the biggest increases in labor productivity. At best there is only a slight positive relationship between patents and labor productivity (see the paper for more).