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Do Green Innovations stimulate Employment? – Firm-level Evidence From Germany

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  • Georg Licht
  • Bettina Peters

Abstract

This paper studies the impact of environmental innovation on employment growth in the period 2006-2008 using firm-level data for German manufacturing and services. 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. As a robustness check patent data on green technologies are employed. The results demonstrate that both environmental and non-environmental product innovations stimulate employment growth. We find a similar gross employment effect of both types of product innovations. That is, one-percent increases in sales stemming from new environmental and non-environmental products increase gross employment by one percent each. Thus, we do not find evidence that that new products with environmental benefits for consumers are produced with higher or lower efficiency than old products. Yet, the net employment contribution of non-green product innovations is 4 to 5 times larger than the net contribution of green product innovations. This is the result of differences in the average innovation engagement and innovation success of both types of new products. In contrast, environmental and non-environmental process innovation plays only a little role for employment growth. In particular, we do not identify a significant trade-off between more environmental-friendly production technologies and employment growth. This holds for both cleaner production technologies and end-of pipe technologies.

Suggested Citation

  • Georg Licht & Bettina Peters, 2014. "Do Green Innovations stimulate Employment? – Firm-level Evidence From Germany," WWWforEurope Working Papers series 53, WWWforEurope.
  • Handle: RePEc:feu:wfewop:y:2014:m:2:d:0:i:53
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    References listed on IDEAS

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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 255-284, April.
    2. 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.
    3. 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.
    4. Harrison, Rupert & Jaumandreu, Jordi & Mairesse, Jacques & Peters, Bettina, 2014. "Does innovation stimulate employment? A firm-level analysis using comparable micro-data from four European countries," International Journal of Industrial Organization, Elsevier, vol. 35(C), pages 29-43.
    5. Jacques Mairesse, 2008. "Employment, innovation, and productivity: evidence from Italian microdata," Industrial and Corporate Change, Oxford University Press, vol. 17(4), pages 813-839, August.
    6. Vivarelli, Marco, 2007. "Innovation and Employment: A Survey," IZA Discussion Papers 2621, Institute for the Study of Labor (IZA).
    7. Marin, Giovanni, 2014. "Do eco-innovations harm productivity growth through crowding out? Results of an extended CDM model for Italy," Research Policy, Elsevier, vol. 43(2), pages 301-317.
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    10. 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 359-381, September.
    11. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," CERT Discussion Papers 0706, Centre for Economic Reform and Transformation, Heriot Watt University.
    12. Zuniga, Pluvia & Crespi, Gustavo, 2013. "Innovation strategies and employment in Latin American firms," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 1-17.
    13. Ben Kriechel & Thomas Ziesemer, 2009. "The environmental Porter hypothesis: theory, evidence, and a model of timing of adoption," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(3), pages 267-294.
    14. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
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    17. Bogliacino, Francesco & Pianta, Mario, 2010. "Innovation and Employment: a Reinvestigation using Revised Pavitt classes," Research Policy, Elsevier, vol. 39(6), pages 799-809, July.
    18. 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.
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    Cited by:

    1. repec:feu:wfedel:y:2016:m:2:d:0:i:11 is not listed on IDEAS
    2. Jens Horbach & Markus Janser, 2016. "The role of innovation and agglomeration for employment growth in the environmental sector," Industry and Innovation, Taylor & Francis Journals, vol. 23(6), pages 488-511, August.
    3. repec:feu:wfedel:y:2016:m:2:d:0:i:12 is not listed on IDEAS
    4. Georg Licht & Bettina Peters & Christian Köhler & Franz Schwiebacher, 2014. "The Potential Contribution of Innovation Systems to Socio-Ecological Transition," WWWforEurope Deliverables series 4, WWWforEurope.
    5. Karl Aiginger, 2016. "New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition. Synthesis Report Part I," WWWforEurope Deliverables series 11, WWWforEurope.
    6. Kurt Bayer, 2015. "Institutional Set-up and Conflict Resolution. Implementation of the WWWforEurope Transition Strategy," WWWforEurope Working Papers series 99, WWWforEurope.
    7. Consoli, Davide & Marin, Giovanni & Marzucchi, Alberto & Vona, Francesco, 2016. "Do green jobs differ from non-green jobs in terms of skills and human capital?," Research Policy, Elsevier, vol. 45(5), pages 1046-1060.
    8. Brian Chi-ang Lin & Siqi Zheng & Nicolò Barbieri & Claudia Ghisetti & Marianna Gilli & Giovanni Marin & Francesco Nicolli, 2016. "A Survey Of The Literature On Environmental Innovation Based On Main Path Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 30(3), pages 596-623, July.

    More about this item

    Keywords

    Employment growth; environmental innovation; green patents;

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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