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Does Innovation Destroy Employment in the Services Sector? Evidence from a Developing Country

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  • Diego Aboal
  • Paula Garda
  • Bibiana Lanzilotta
  • Marcelo Perera

Abstract

The employment effect of innovation in the heterogeneous universe of services is investigated using firm-level data provided by the 2004–9 Uruguayan services innovation surveys. The empirical analysis shows that the effect of product innovation on employment is positive, while process innovation appears to have no effect. Process innovation activities tend to replace low-skilled jobs with jobs of a higher level of qualification. Product innovation allows for efficiency gains in the production of new services with unskilled labor, and no gains with skilled labor. The results found for knowledge-intensive business services and small firms, with some exceptions, are similar to those found for the whole sample.

Suggested Citation

  • Diego Aboal & Paula Garda & Bibiana Lanzilotta & Marcelo Perera, 2015. "Does Innovation Destroy Employment in the Services Sector? Evidence from a Developing Country," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(3), pages 558-577, May.
    • Handle: RePEc:mes:emfitr:v:51:y:2015:i:3:p:558-577
    DOI: 10.1080/1540496X.2015.1026692
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    Cited by:

    1. Porath, Daniel & Nabachwa, Sarah & Agasha, Ester & Kijjambu, Nsambu Frederick, 2021. "Innovation and employment in Sub-Saharan Africa," UASM Discussion Paper Series 10/2021, University of Applied Sciences Mainz.
    2. Brida, Juan Gabriel & Ladós, Valentina & Sicilia, Gabriela, 2021. "Eficiencia innovadora en el sector servicios: el caso de Uruguay. || Innovative efficiency in the service sector: the case of Uruguay," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 31(1), pages 240-258, June.

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