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The Effect of R&D Growth on Employment and Self-Employment in Local Labour Markets

Author

Listed:
  • Tommaso Ciarli

    (SPRU, University of Sussex)

  • Alberto Marzucchi

    (SPRU, University of Sussex)

  • Edgar Salgado

    (SPRU, University of Sussex)

  • Maria Savona

    (SPRU, University of Sussex)

Abstract

The paper investigates the effects of firms’ investment in Research and Development (R&D) on employment dynamics in the British local labour markets (Travel to Work Areas). We distinguish between local areas characterised by the initial level of routinised employment of the workforce. We implement a instrumenting strategy to address endogeneity issues in the relation between innovation and employment. Our results suggest that increases in R&D investments mainly affect routinised areas, where the employment created is low skilled, concentrated in non-tradable sectors (like transport, construction) and services. A significant share of the jobs created is self-employment, concentrated in the 25-34 age cohort. We qualify the effect of R&D on self-employment by looking at local firms’ dynamics, which suggest that the increase in self-employment is reflected in a higher number of micro-firms. Rather, in non-routinized areas, R&D results in the expected increase in the demand of high-skilled workers and a reduced demand of low-skill employment.

Suggested Citation

  • Tommaso Ciarli & Alberto Marzucchi & Edgar Salgado & Maria Savona, 2018. "The Effect of R&D Growth on Employment and Self-Employment in Local Labour Markets," SPRU Working Paper Series 2018-08, SPRU - Science Policy Research Unit, University of Sussex Business School.
    • Handle: RePEc:sru:ssewps:2018-08
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    References listed on IDEAS

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    Cited by:

    1. Ioramashvili, Carolin, 2024. "Technological invention and local labour markets: evidence from France, Germany and the UK," LSE Research Online Documents on Economics 123630, London School of Economics and Political Science, LSE Library.
    2. Fierro, Luca Eduardo & Caiani, Alessandro & Russo, Alberto, 2022. "Automation, Job Polarisation, and Structural Change," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 499-535.
    3. Sossdorf, Fernando, 2022. "Winners take all (the most): The effects of market concentration on labor share and wage inequality," MPRA Paper 113642, University Library of Munich, Germany.
    4. Goos, Maarten & Rademakers, Emilie & Röttger, Ronja, 2021. "Routine-Biased technical change: Individual-Level evidence from a plant closure," Research Policy, Elsevier, vol. 50(7).
    5. Tommaso Ciarli & Mattia Di Ubaldo & Maria Savona, 2019. "Innovation and Self-Employment," SPRU Working Paper Series 2019-17, SPRU - Science Policy Research Unit, University of Sussex Business School.
    6. Lee, Neil & Clarke, Stephen, 2019. "Do low-skilled workers gain from high-tech employment growth? High-technology multipliers, employment and wages in Britain," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    7. Fabien Petit & Florencia Jaccoud & Tommaso Ciarli, 2023. "Heterogeneous Adjustments of Labor Markets to Automation Technologies," CESifo Working Paper Series 10237, CESifo.
    8. Guilmi, Corrado Di & Fujiwara, Yoshi, 2022. "Dual labor market, financial fragility, and deflation in an agent-based model of the Japanese macroeconomy," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 346-371.
    9. Wirkierman, Ariel L. & Ciarli, Tommaso & Savonna, Maria, 2021. "A map of the fractal structure of high-tech dynamics across EU regions," MERIT Working Papers 2021-023, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    Innovation; R&D investments; Employment; Self-employment; Local Labour Markets; Routinisation; Skills;
    All these keywords.

    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
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D3 - Microeconomics - - Distribution

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