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Employment effect of innovation under different market structures: Findings from Korean manufacturing firms

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  • Lim, Jisun
  • Lee, Keun

Abstract

This research provides empirical evidence on the employment effect of both process and product innovations under different market structures, using data from 1999 to 2009 on 11,369 manufacturing firms in Korea. Consistent to the literature, it first finds that the overall employment effect of innovations is positive, since process innovations do not have any significant effect but product innovations have positive and significant effects on employment. Then, our contribution is to estimate the employment effect of innovations in different market structure by adding interaction terms between proxies for market structure and each type of innovation. We find that process innovation has a greater negative effect in more monopolistic markets, and confirm no significant differences in the employment effect of product innovations across different market structure. Overall, we show that innovations have different effects on employment across different market structures, which implies that a competitive market is important for increasing employment through innovation.

Suggested Citation

  • Lim, Jisun & Lee, Keun, 2019. "Employment effect of innovation under different market structures: Findings from Korean manufacturing firms," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 606-615.
  • Handle: RePEc:eee:tefoso:v:146:y:2019:i:c:p:606-615
    DOI: 10.1016/j.techfore.2018.04.022
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    References listed on IDEAS

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    Cited by:

    1. Paola Azar, 2020. "Politics as a determinant of primary school provision The case of Uruguay, 1914-1954," Documentos de Trabajo (working papers) 20-07, Instituto de Economia - IECON.
    2. Carlos Bianchi & Hugo Laguna, 2020. "Firm’s innovation strategies and employment: new evidence from Uruguay," Documentos de Trabajo (working papers) 20-06, Instituto de Economia - IECON.

    More about this item

    Keywords

    Product innovation; Process innovation; Employment; Market structure; Korean firms; Empirical analysis;

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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