Innovation in the U.S. economy is about employing and rewarding highly talented workers to produce new products. Using unique longitudinal matched employer-employee data, this paper makes a key connection between talent and firms in markets with risky product innovations. We show that software...

Innovation in the U.S. economy is about employing and rewarding highly talented workers to produce new products. Using unique longitudinal matched employer-employee data, this paper makes a key connection between talent and firms in markets with risky product innovations. We show that software...

Firms that want to innovate successfully need to hire and motivate highly talented workers. This paper makes a key connection between the potential returns to innovation in terms of new products and the structure of compensation to skilled employees. We use linked employer-employee data to show...