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The job creation effect of R&D expenditures

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Abstract

In this study we use a unique database covering 25 manufacturing and service sectors for 15 European countries over the period 1996-2005, for a total of 2,295 observations, and apply GMM-SYS panel estimations of a demand-for-labour equation augmented with technology. We find that R&D expenditures -fostering product innovation- have a job-creating effect, in accordance with the previous theoretical and empirical literature discussed in the paper. Interestingly enough, the labour-friendly nature of R&D emerges in both the flow and the stock specifications. These findings provide further justification for the European Lisbon-Barcelona targets.

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File URL: http://iri.jrc.ec.europa.eu/documents/10180/cdd21c77-b9de-4580-af62-a9c512aeb619
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Bibliographic Info

Paper provided by Institute of Prospective Technological Studies, Joint Research Centre in its series JRC-IPTS Working Papers on Corporate R&D and Innovation with number 2010-04.

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Length: 27 pages
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:ipt:wpaper:201004

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Keywords: Technological change; corporate R&D; employment; product innovation; GMM-SYS;

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References

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  1. Bronwyn H. HALL, 2005. "Measuring the Returns to R&D: the Depreciation Problem," Annales d'Economie et de Statistique, ENSAE, issue 79-80, pages 341-381.
  2. Brouwer, E. & Kleinknecht, Alfred & Reijnen, J.O.N., 1993. "Employment growth and innovation at the firm level," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5662246, Tilburg University.
  3. Rinaldo Evangelista & Maria Savona, 2002. "The Impact of Innovation on Employment in Services: Evidence from Italy," International Review of Applied Economics, Taylor & Francis Journals, vol. 16(3), pages 309-318.
  4. Sinclair, Peter J N, 1981. "When Will Technical Progress Destroy Jobs?," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 1-18, March.
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  6. Hall, P. H. & Heffernan, S. A., 1985. "More on the employment effects of innovation," Journal of Development Economics, Elsevier, vol. 17(1-2), pages 151-162.
  7. Richard Blundell & Steve Bond, 1999. "GMM estimation with persistent panel data: an application to production functions," IFS Working Papers W99/04, Institute for Fiscal Studies.
  8. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  9. Dobbs, I M & Hill, M B & Waterson, M, 1987. "Industrial Structure and the Employment Consequences of Technical Change," Oxford Economic Papers, Oxford University Press, vol. 39(3), pages 552-67, September.
  10. Hall, Bronwyn H. & Mairesse, Jacques, 1995. "Exploring the relationship between R&D and productivity in French manufacturing firms," Journal of Econometrics, Elsevier, vol. 65(1), pages 263-293, January.
  11. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  12. Francesco Aiello & Paola Cardamone, 2008. "R&D spillovers and firms’ performance in Italy," Empirical Economics, Springer, vol. 34(1), pages 143-166, February.
  13. Andrea Conte & Marco Vivarelli, 2006. "One or Many Knowlede Production Functions? Mapping Innovative Activity Using Microdata," Papers on Entrepreneurship, Growth and Public Policy 2006-03, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  14. Petit, Pascal, 1993. "Employment and technical change," CEPREMAP Working Papers (Couverture Orange) 9330, CEPREMAP.
  15. Bogliacino, Francesco & Pianta, Mario, 2010. "Innovation and Employment: a Reinvestigation using Revised Pavitt classes," Research Policy, Elsevier, vol. 39(6), pages 799-809, July.
  16. Vivarelli, Marco & Evangelista, Rinaldo & Pianta, Mario, 1996. "Innovation and employment in Italian manufacturing industry," Research Policy, Elsevier, vol. 25(7), pages 1013-1026, October.
  17. Mariacristina Piva & Marco Vivarelli, 2004. "Technological change and employment: some micro evidence from Italy," Applied Economics Letters, Taylor & Francis Journals, vol. 11(6), pages 373-376.
  18. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-71, September.
  19. Vivarelli, Marco, 2007. "Innovation and Employment: A Survey," IZA Discussion Papers 2621, Institute for the Study of Labor (IZA).
  20. Brouwer, Erik & Kleinknecht, Alfred & Reijnen, Jeroen O N, 1993. "Employment Growth and Innovation at the Firm Level," Journal of Evolutionary Economics, Springer, vol. 3(2), pages 153-59, May.
  21. Piva, Mariacristina & Vivarelli, Marco, 2003. "Innovation and Employment: Evidence from Italian Microdata," IZA Discussion Papers 730, Institute for the Study of Labor (IZA).
  22. Parisi, Maria Laura & Schiantarelli, Fabio & Sembenelli, Alessandro, 2006. "Productivity, innovation and R&D: Micro evidence for Italy," European Economic Review, Elsevier, vol. 50(8), pages 2037-2061, November.
  23. Ronald Schettkat, 1997. "Book Review," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 153(2), pages 434-435, June.
  24. Van Reenen, John, 1997. "Employment and Technological Innovation: Evidence from U.K. Manufacturing Firms," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 255-84, April.
  25. Tommaso Antonucci & Mario Pianta, 2002. "Employment Effects of Product and Process Innovation in Europe," International Review of Applied Economics, Taylor & Francis Journals, vol. 16(3), pages 295-307.
  26. Jacques Mairesse & Mohamed Sassenou, 1991. "R&D Productivity: A Survey of Econometric Studies at the Firm Level," NBER Working Papers 3666, National Bureau of Economic Research, Inc.
  27. Thomas Hatzichronoglou, 1997. "Revision of the High-Technology Sector and Product Classification," OECD Science, Technology and Industry Working Papers 1997/2, OECD Publishing.
  28. Neary, J Peter, 1981. "On the Short-Run Effects of Technological Progress," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 224-33, July.
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Citations

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Cited by:
  1. Vivarelli, Marco, 2012. "Innovation, Employment and Skills in Advanced and Developing Countries: A Survey of the Literature," IZA Discussion Papers 6291, Institute for the Study of Labor (IZA).
  2. Ilina Srour & Erol Taymaz & Marco Vivarelli, 2014. "Globalization, Technology and Skills: Evidence from Turkish Longitudinal Microdata," ERC Working Papers 1405, ERC - Economic Research Center, Middle East Technical University, revised Jun 2014.
  3. Antonio Vezzani & Sandro Montresor, 2013. "The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations," JRC-IPTS Working Papers on Corporate R&D and Innovation 2013-02, Institute of Prospective Technological Studies, Joint Research Centre.
  4. Francesco Bogliacino & Mariacristina Piva & Marco Vivarelli, 2011. "Job Creation Effects of R&D Expenditures: Are High-tech Sectors the Key?," JRC-IPTS Working Papers on Corporate R&D and Innovation 2011-10, Institute of Prospective Technological Studies, Joint Research Centre.
  5. Vivarelli, Marco, 2014. "Structural Change and Innovation as Exit Strategies from the Middle Income Trap," IZA Discussion Papers 8148, Institute for the Study of Labor (IZA).
  6. Horst Feldmann, 2013. "Technological unemployment in industrial countries," Journal of Evolutionary Economics, Springer, vol. 23(5), pages 1099-1126, November.

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