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The Impact of Green Innovation on Employment Growth in Europe

  • Georg Licht
  • Bettina Peters

This paper studies the impact of environmental innovation on employment growth using firmlevel data for 16 European countries and the period 2006-2008. It extends the model by Harrison et al (2008) in order to distinguish between employment effects of environmental and non-environmental product as well as process innovation. By looking at country and sector level differences, it also generates new insights into the heterogeneity of the environmental innovation-employment growth link along different dimensions. The results demonstrate that both environmental and non-environmental product innovations are conducive to employment growth in European firms. We estimate a gross employment effect of product innovation for both types of product innovators that is very similar in nearly all countries and sectors. That is, in most cases a one-percent increase in the sales due to new products for environmental product innovators also increases gross employment by one percent. This implies that there is no evidence that environmentally-friendly new products are produced with higher or lower efficiency than old products. Yet, we observe differences in the contribution of environmental and non-environmental product innovation to employment growth across countries or sectors that are the result of differences in the average innovation engagement and innovation success across countries or sectors. The absolute contribution to employment growth is positive for both types of new products. However, we find mixed evidence for the relative importance. In manufacturing the contribution of environmental product innovators was larger than that of non-environmental product innovators in half of the countries. In services, however, non-environmental product innovators matters more for growth in the vast majority of countries. In contrast, environmental and non-environmental process innovation plays only a little role for employment growth.

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Paper provided by WWWforEurope in its series WWWforEurope Working Papers series with number 50.

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Length: 62
Date of creation: Dec 2013
Date of revision:
Publication status: published
Handle: RePEc:feu:wfewop:y:2013:m:12:d:0:i:50
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Order Information: Postal: WWWforEurope Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
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  1. 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.
  2. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
  3. Smolny, Werner, 1998. "Innovations, Prices and Employment: A Theoretical Model and an Empirical Application for West German Manufacturing Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 359-81, September.
  4. Bronwyn H. Hall & Francesca Lotti & Jacques Mairesse, 2007. "Employment, Innovation, and Productivity: Evidence from Italian Microdata," NBER Working Papers 13296, National Bureau of Economic Research, Inc.
  5. Harrison, Rupert & Jaumandreu Balanzo, Jordi & Mairesse, Jacques & Peters, Bettina, 2008. "Does Innovation Stimulate Employment? A Firm-Level Analysis Using Comparable Micro-Data From Four European Countries," ZEW Discussion Papers 08-111, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," Boston College Working Papers in Economics 667, Boston College Department of Economics, revised 05 Sep 2007.
  7. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
  8. Lachenmaier, Stefan & Rottmann, Horst, 2011. "Effects of innovation on employment: A dynamic panel analysis," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 210-220, March.
  9. Crespi, Gustavo & Zuniga, Pluvia, 2012. "Innovation strategies and employment in Latin American firms," MERIT Working Papers 022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  10. Cragg, John G. & Donald, Stephen G., 1993. "Testing Identifiability and Specification in Instrumental Variable Models," Econometric Theory, Cambridge University Press, vol. 9(02), pages 222-240, April.
  11. Buch, Claudia M. & Lipponer, Alexander, 2010. "Volatile multinationals? Evidence from the labor demand of German firms," Labour Economics, Elsevier, vol. 17(2), pages 345-353, April.
  12. Bogliacino, Francesco & Pianta, Mario, 2010. "Innovation and Employment: a Reinvestigation using Revised Pavitt classes," Research Policy, Elsevier, vol. 39(6), pages 799-809, July.
  13. repec:idb:brikps:publication-detail,7101.html?id=34766 is not listed on IDEAS
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