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The effect of innovation on skilled and unskilled workers during bad times

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  • Díaz, Guillermo Arenas
  • Barge-Gil, Andrés
  • Heijs, Joost

Abstract

The recent economic crises generated a dramatic reduction of employment, but the role of innovation has barely been analyzed. This study contributes to the literature by analyzing the differentiated effect of product and process innovation on high- and low- skilled employment during bad times. We focus on the case of Spain, a country with one of the largest reductions in employment during the crisis. The main results suggest a positive effect of innovation on employment during bad times, although this effect is remarkably larger for high-skilled than for low-skilled workers. These results hold across industries and are exacerbated in high-tech industries. It is estimated that product and process innovations account for around 13% of the different evolution between high-skilled and low-skilled employment during the crisis. These results implicitly reflect that innovation – especially product innovation – favors a bias towards the demand of high-skilled employment in detriment of low-skilled workers.

Suggested Citation

  • Díaz, Guillermo Arenas & Barge-Gil, Andrés & Heijs, Joost, 2020. "The effect of innovation on skilled and unskilled workers during bad times," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 141-158.
    • Handle: RePEc:eee:streco:v:52:y:2020:i:c:p:141-158
    DOI: 10.1016/j.strueco.2019.09.012
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    More about this item

    Keywords

    Skill biased technological change; Crisis; Labor demand; Product and process innovation; High- versus Low-skilled workers;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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