Abstract: Economists have long struggled to understand why aggregate TFP growth has dropped in recent decades while the number of new patents filed has steadily increased. I offer an explanation for this puzzling divergence: the creativity embodied in US patents has dropped dramatically over time. To separate creative from derivative patents, I develop a novel, text-based, measure of patent creativity: the share of two-word combinations that did not appear in previous patents. I show that only creative and not derivative patents are associated with significant improvements in firm level productivity and stock market valuations. Using the measure, I show that younger inventors on average file more creative patents. To estimate the effect of changing US demographics on aggregate creativity and productivity growth, I build a growth model with endogenous creation and adoption of technologies. In this model, falling population growth explains 42% of the observed decline in patent creativity, 32% of the slowdown in productivity growth, and 15% of the increase in  derivative patenting.

Abstract: We identify novel technologies using textual analysis of patents, job postings, and earnings calls. Our approach enables us to document the diffusion of 29 disruptive technologies across firms and labor markets in the U.S. Four stylized facts emerge from our data. First, as technologies mature and the number of new jobs related to them grows, they gradually spread across space. While initial hiring is concentrated on high-skilled jobs, over time the mean skill level in new positions associated with the technologies declines, broadening the types of jobs that adopt a given technology. At the same time, the geographic diffusion of low-skilled positions is significantly faster than higher-skilled ones, so that the locations where initial discoveries were made retain their leading positions among high-paying positions for decades. Finally, such technology hubs are more likely to arise in areas with universities and high skilled labor pools.