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Investment, innovation activities and employment across European regions

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  • Destefanis, Sergio
  • Rehman, Naqeeb Ur

Abstract

This study examines the effect of various forms of investment expenditure (gross fixed capital formation, R&D and European Structural and Investment Funds) on employment across NUTS2 European regions from 2000 to 2016. We find that the effect of R&D is heavily conditional upon regional characteristics. Only in NUTS2 regions with medium to high levels of innovation is R&D likely to generate employment. Gross fixed capital formation is labour friendly, but less so in highly innovative regions. Accordingly, the more that European regions shift closer to the world's technology frontier, the more that R&D expenditure, rather than investment in physical assets, will be capable of generating positive employment externalities. Amongst European Structural and Investment Funds, we find an especially significant effect for the European Agricultural Fund for Rural Development (in the more developed regions) and the Cohesion Fund.

Suggested Citation

  • Destefanis, Sergio & Rehman, Naqeeb Ur, 2023. "Investment, innovation activities and employment across European regions," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 474-490.
    • Handle: RePEc:eee:streco:v:65:y:2023:i:c:p:474-490
    DOI: 10.1016/j.strueco.2023.03.013
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    More about this item

    Keywords

    Gross fixed capital formation; ESIF; R&D; Cohesion policy; Labour demand;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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