Intellectual Monopoly and Income Inequality in the United States, 1948–2021: A Long-Run Analysis

Proponents of intellectual property claim that it fosters innovation and benefits companies and workers by increasing long-run growth. A growing body of literature challenges these claims by arguing that the cumulative nature of intellectual monopoly amplifies asymmetries between winners and losers. Intellectual monopolies pose disadvantages for countries, firms, consumers, and workers who struggle to maintain a leading position. Using data at the aggregate level from 1948 to 2021 in the United States, this article estimates the long-run effects of proprietary knowledge accumulation on income shares and tests the hypothesis that intellectual monopoly amplifies income inequality. The empirical evidence shows that companies in the United States transferred to wages a significant share of their profits from intellectual property. But these transfers have widened income inequality by benefiting the top 10 and top 25 percent, to the detriment of lower income brackets. Intellectual property alone can explain 23 percent of the increase in the income share of the top 10 percent in the 1948–2021 period. JEL Classification: O34, E25, C22