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Innovation and jobs: evidence from manufacturing firms

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  • Garcia, Angel
  • Jaumandreu, Jordi
  • Rodriguez, Cesar

Abstract

This paper is aimed at structurally assessing the employment effects of the innovative activities of firms. We estimate firm level displacement and compensation effects in a model in which the stock of knowledge capital raises firm relative efficiency through process innovations and firm demand through product innovations. Displacement is estimated from the elasticity of employment with respect to innovation in the (conditional or Hicksian) demand for labour. Compensation effects are estimated from a firm-specific demand relationship. We also assess the enlargement and weakening of these effects due to firm agents’ behaviour aimed at appropriating innovation rents. We find that the potential employment compensation effect of process innovations surpasses the displacement effect, both in the short and long run (when competitors react), and that product innovation doubles the expanding impact by unit of expenditure, but also that agents’ behaviour can seriously reduce these effects. The actual elasticity of employment to knowledge capital is estimated, however, not far from unity, while “passive” productivity growth is suggested to have null or negative employment effects.

Suggested Citation

  • Garcia, Angel & Jaumandreu, Jordi & Rodriguez, Cesar, 2004. "Innovation and jobs: evidence from manufacturing firms," MPRA Paper 1204, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:1204
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Christine Mee Lie, 2016. "Do ‘green’ employment effects vary across industries? Implications for green growth," Working Papers on Innovation Studies 20161014, Centre for Technology, Innovation and Culture, University of Oslo.
    3. Luigi Aldieri & Concetto Paolo Vinci, 2019. "Firm Size and Sustainable Innovation: A Theoretical and Empirical Analysis," Sustainability, MDPI, Open Access Journal, vol. 11(10), pages 1-9, May.
    4. Harrison, Rupert & Jaumandreu, Jordi & Mairesse, Jacques & Peters, Bettina, 2005. "Does innovation stimulate employment? A firm-level analysis using comparable micro data on four European countries," MPRA Paper 1245, University Library of Munich, Germany.
    5. Ornaghi, Carmine, 2006. "Spillovers in product and process innovation: Evidence from manufacturing firms," International Journal of Industrial Organization, Elsevier, vol. 24(2), pages 349-380, March.
    6. Ornaghi, Carmine, 2002. "Assessing the effectos of measurement errors on the estimation of the production function," UC3M Working papers. Economics we023314, Universidad Carlos III de Madrid. Departamento de Economía.
    7. Peters, Bettina, 2004. "Employment Effects of Different Innovation Activities: Microeconometric Evidence," ZEW Discussion Papers 04-73, ZEW - Leibniz Centre for European Economic Research.
    8. Heijs, Joost & Arenas Díaz, Guillermo & Vergara Reyes, Delia Margarita, 2019. "Impact of innovation on employment in quantitative terms: review of empirical literature based on microdata," MPRA Paper 95326, University Library of Munich, Germany.
    9. Bernhard Dachs & Martin Hud & Christian Köhler & Bettina Peters, 2016. "Employment Effects of Innovations over the Business Cycle: Firm-Level Evidence from European Countries," DEM Discussion Paper Series 16-20, Department of Economics at the University of Luxembourg.
    10. Priscilla Twumasi Baffour & F. Ebo Turkson & Agyapomaa Gyeke-Dako & Abena D. Oduro & Emmanuel Nii Abbey, 2020. "Innovation and employment in manufacturing and service firms in Ghana," Small Business Economics, Springer, vol. 54(4), pages 1153-1164, April.
    11. Luigi Aldieri & Concetto Paolo Vinci, 2018. "Green Economy and Sustainable Development: The Economic Impact of Innovation on Employment," Sustainability, MDPI, Open Access Journal, vol. 10(10), pages 1-11, October.
    12. Beom Cheol Cin & Hae-young Lee & Jongsung Kim, 2015. "Empirical analysis on the effect of technology innovation on employment in Korean Inno-Biz SMEs," Economics Bulletin, AccessEcon, vol. 35(4), pages 2258-2269.
    13. Massimiliano Agovino & Luigi Aldieri & Antonio Garofalo & Concetto Paolo Vinci, 2018. "R&D spillovers and employment: evidence from European patent data," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(2), pages 247-260, May.
    14. Cesar Rodriguez-Gutierrez, 2006. "An explanation of the changes in the proportion of temporary workers in Spain," Applied Economics, Taylor & Francis Journals, vol. 38(1), pages 47-62.
    15. Aldieri, Luigi & Grafström, Jonas & Paolo Vinci, Concetto, 2020. "Job Creation in the Wind Power Sector Through Marshallian and Jacobian Knowledge Spillovers," Ratio Working Papers 340, The Ratio Institute.
    16. Angela Triguero & David Córcoles & Maria Cuerva, 2014. "Persistence of innovation and firm’s growth: evidence from a panel of SME and large Spanish manufacturing firms," Small Business Economics, Springer, vol. 43(4), pages 787-804, December.
    17. Aldieri, Luigi & Garofalo, Antonio & Vinci, Concetto Paolo, 2015. "R&D Spillovers and Employment: A Micro-econometric Analysis," MPRA Paper 67269, University Library of Munich, Germany.
    18. Luigi Aldieri & Maxim Kotsemir & Concetto Paolo Vinci, 2019. "The impact of environmental innovations on job-creation process: an empirical investigation for Russian regions," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(2), pages 285-306, April.

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