The impact of intellectual property rights on labor productivity: do constitutions matter?

Abstract

Focusing on a sample of 22 industries and 22 OECD countries and controlling for a full set of year-, industry-, and country fixed effects (and their interactions), we first show that intellectual property rights (IPRs) protection, by means of both constitutional provisions and ordinary laws, is positively associated with the dynamics industry-level labor productivity. Disentangling the impact of constitutional provisions from that of ordinary laws, we then show that constitutional provisions protecting IPRs positively affect the differential in labor productivity between high and low R&D intensive industries. This effect is driven by the mutually reinforcing impact of constitutional IPRs protection and R&D investment in the high R&D intensive industries. Furthermore, the impact of constitutions appears to bestronger in those countries where IPRs protection by ordinary laws is weaker.