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Does Innovation Affect the Demand for Employment and Skilled Labor?

Author

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  • Adriana Peluffo

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

Abstract

The objective of this work is to analyze the effect of innovation on labor demand, particularly, the level of employment and the skills composition of the labor force, in level and growth rates. Additionally, we analyze the ratio of skilled to unskilled labor and wages. The data for this study come from the Innovation Surveys for Uruguayan manufacturing and service firms over the 2000-2015 period matched with the Industrial Surveys of Economic Activity. We analyze the whole sample and each sector according to technological/knowledge intensity and firm size. Our results for ordinary least squares, instrumental variables, and generalized method of moments show positive effects of innovation in the level of total employment and skilled workers, its rate of growth, and wages. Product and Enhancing productivity innovation show positive impact on employment. Splitting by manufacturing firms we observe that product innovation affect growth in employment for high-tech firms while organizational innovation and productivity enhancing innovation affects growth in skilled labor with a greater effect for low-tech firms, while organizational innovation affects growth in skilled labor and in the share of skilled labor. Small manufacturing and service firms are less responsive to innovation. Growth in employment of service firms are affected mainly by organizational innovation and productivity enhancing innovation. Thus, enhancing productivity innovation and its component of organizational innovation seems to play an important role on employment growth.

Suggested Citation

  • Adriana Peluffo, 2020. "Does Innovation Affect the Demand for Employment and Skilled Labor?," Documentos de Trabajo (working papers) 20-13, Instituto de Economía - IECON.
    • Handle: RePEc:ulr:wpaper:dt-13-20
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    File URL: https://hdl.handle.net/20.500.12008/26634
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    Cited by:

    1. Laureti, Lucio & Costantiello, Alberto & Matarrese, Marco Maria & Leogrande, Angelo, 2022. "The Employment in Innovative Enterprises in Europe," MPRA Paper 111335, University Library of Munich, Germany.

    More about this item

    Keywords

    Employment; Skilled Labor; Product Innovation; Process Innovation;
    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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