Tracking the technological composition of industries with algorithmic patent concordances

ABSTRACT

Patents are a useful proxy for innovation, technological change, and diffusion. However, fully exploiting patent data for economic analyses requires linking patents to measures of economic activity, which has proven to be difficult. We construct probabilistic linkages between the U.S. Patent Classification (USPC) system and Cooperative Patent Classification (CPC) system and industry and product classifications including the North American Industrial Classification System (NAICS), International Standard Industrial Classification (ISIC), Harmonized System (HS) and Standard International Trade Classification (SITC). We use these concordances to evaluate the persistence of technology-industry relationships over time by generating linkages over different years of patent data. We find strong persistence in technology usage within industries and, until recently, relatively little change in the technology composition of industries over time. As the technology composition of industries becomes more stable, we find evidence of increased specialization. Finally, we show that industries that exhibit changing technology composition also show shifting occupational composition.