The transformative effects of tacit technological knowledge

Tacit knowledge – ideas that cannot readily be meaningfully and completely communicated – has long been considered a precursor to scientific and technological advances. Using words and phrases found in the universe of USPTO patents 1940-2020, we propose a new method of measuring tacit knowledge and its progressive codification. We uncover a discontinuity in the production of highly tacit technologies. Before 1980, highly- and less-tacit inventions are evenly distributed among inventors, organizations, scientific domains and subnational regions. After 1980, inventors of highly tacit patents become relatively rare, and increasingly concentrated in domains and locations. The economic payoffs to tacit knowledge also change, as it starts unequally rewarding high-income workers. This suggests a role for tacit knowledge in contributing to the rise in income inequality since 1980.