There is plenty of evidence for market failures that motivate government intervention for innovation in general and research and development (R&D) in particular. R&D subsidies are a policy tool of major importance - both in theory and practice. The empirical evidence for the effectiveness of R&D...

This article first reviews the economic rationales for innovation policy. It then describes the Finnish innovation policy and policy making environment. The Finnish policy is evaluated from the point of view of fostering entrepreneurship. R&D subsidies, the main tool of Finnish innovation...

The returns to entrepreneurship are monetary and non-monetary. We offer new evidence on these returns using a large sample of genetically identical male twins. Our within-twin analysis suggests that OLS estimates are downwards, and traditional first-differenced panel data estimates upwards...

This article first reviews the economic rationales for innovation policy. It then describes the Finnish innovation policy and policy making environment. The Finnish policy is evaluated from the point of view of fostering entrepreneurship. R&D subsidies, the main tool of Finnish innovation...

Using 15 years of data on Finnish twins, we find that 24% (54%) of the variance of women’s (men’s) lifetime income is due to genetic factors and that the contribution of the shared environment is negligible. We link these figures to policy by showing that controlling for education reduces...

A key input to inventive activity is human capital. Hence it is important to understand the monetary incentives of inventors. We estimate the effect of patented inventions on individual earnings by linking data on U.S. patents and their inventors to Finnish employer-employee data. Returns are...

Whether or not banks are engaged in ex ante monitoring of customers may have important consequences for the whole economy.We approach this question via a model in which banks can invest in either information acquisition or market power (product differentiation). The two alternatives generate...

We study a financial market adverse selection model where all agents are endowed with initial wealth and choose to invest as entrepreneurs or financiers, or not to invest.We show that often a lack of outside finance leads to the emergence of financial markets where availability of outside...