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Does Innovation Stimulate Employment? A Firm-Level Analysis Using Comparable Micro-Data From Four European Countries

  • Harrison, Rupert
  • Jaumandreu Balanzo, Jordi
  • Mairesse, Jacques
  • Peters, Bettina

This paper studies the impact of process and product innovations introduced by firms on employment growth in these firms. A simple model that relates employment growth to process innovations and to the growth of sales separately due to innovative and unchanged products is developed and estimated using comparable firm-level data from France, Germany, Spain and the UK. Results show that displacement effects induced by productivity growth in the production of old products are large, while those associated with process innovations, which are likely to be compensated by price decreases, appear to be small. The effects related to product innovations are, however, strong enough to overcompensate these displacement effects.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-111.

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Date of creation: 2008
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Handle: RePEc:zbw:zewdip:7501
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  1. Crespi, Gustavo & Tacsir, Ezequiel, 2013. "Effects of innovation on employment in Latin America," MERIT Working Papers 001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  2. Brouwer, Erik & Kleinknecht, Alfred & Reijnen, Jeroen O N, 1993. "Employment Growth and Innovation at the Firm Level," Journal of Evolutionary Economics, Springer, vol. 3(2), pages 153-59, May.
  3. James Levinsohn & Amil Petrin, 2000. "Estimating Production Functions Using Inputs to Control for Unobservables," NBER Working Papers 7819, National Bureau of Economic Research, Inc.
  4. Rinaldo Evangelista, 2000. "Sectoral Patterns Of Technological Change In Services," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(3), pages 183-222.
  5. Blechinger, Doris & Kleinknecht, Alfred & Licht, Georg & Pfeiffer, Friedhelm, 1998. "The impact of innovation on employment in Europe: An analysis using CIS data," ZEW Dokumentationen 98-02, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," MERIT Working Papers 006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  7. Bronwyn Hall & Francesca Lotti & Jacques Mairesse, 2006. "Employment, innovation and productivity: evidence from Italian microdata," IFS Working Papers W06/24, Institute for Fiscal Studies.
  8. George S Olley & Ariel Pakes, 1992. "The Dynamics Of Productivity In The Telecommunications Equipment Industry," Working Papers 92-2, Center for Economic Studies, U.S. Census Bureau.
  9. David Blanchflower & Simon Burgess, 1998. "New Technology And Jobs: Comparative Evidence From A Two Country Study," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(2-4), pages 109-138.
  10. 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.
  11. Nickell, S. & Komg, P., 1989. "Technical Progress And Jobs," Papers 366, London School of Economics - Centre for Labour Economics.
  12. Bronwyn H. Hall & Jacques Mairesse, 1992. "Exploring the Relationship Between R&D and Productivity in French Manufacturing Firms," NBER Working Papers 3956, National Bureau of Economic Research, Inc.
  13. Huergo, Elena & Jaumandreu, Jordi, 2004. "Firms' age, process innovation and productivity growth," International Journal of Industrial Organization, Elsevier, vol. 22(4), pages 541-559, April.
  14. Dachs, Bernhard & Peters, Bettina, 2014. "Innovation, employment growth, and foreign ownership of firms," Research Policy, Elsevier, vol. 43(1), pages 214-232.
  15. Peters, Bettina, 2005. "Employment Effects of Different Innovation Activities: Microeconometric Evidence," ZEW Discussion Papers 04-73 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  16. Tor Jakob Klette & Svein Erik Førre, 1995. "Innovation and Job Creation in a Small Open Economy Evidence from Norwegian Manufacturing Plants 1982-92," Discussion Papers 159, Statistics Norway, Research Department.
  17. Rachel Griffith & Elena Huergo & Jacques Mairesse & Bettina Peters, 2006. "Innovation and Productivity across Four European Countries," NBER Working Papers 12722, National Bureau of Economic Research, Inc.
  18. repec:idb:brikps:59978 is not listed on IDEAS
  19. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-53, September.
  20. repec:ner:tilbur:urn:nbn:nl:ui:12-5662246 is not listed on IDEAS
  21. Vivarelli, Marco, 2007. "Innovation and Employment: A Survey," IZA Discussion Papers 2621, Institute for the Study of Labor (IZA).
  22. Nickell, Stephen, 1999. "Product markets and labour markets1," Labour Economics, Elsevier, vol. 6(1), pages 1-20, March.
  23. Haim Regev, 1998. "Innovation, Skilled Labour, Technology And Performance In Israeli Industrial Firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(2-4), pages 301-324.
  24. Doraszelski, Ulrich & Jaumandreu, Jordi, 2006. "R&D and productivity: Estimating production functions when productivity is endogenous," MPRA Paper 1246, University Library of Munich, Germany.
  25. Ross, David R. & Zimmermann, Klaus F., 1993. "Evaluating reported determinants of labor demand," Labour Economics, Elsevier, vol. 1(1), pages 71-84, June.
  26. Carmen Pagés & Gaëlle Pierre & Stefano Scarpetta, 2009. "Job Creation in Latin America : Recent Trends and Policy Challenges," World Bank Publications, The World Bank, number 9386, September.
  27. 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.
  28. Garcia, Angel & Jaumandreu, Jordi & Rodriguez, Cesar, 2004. "Innovation and jobs: evidence from manufacturing firms," MPRA Paper 1204, University Library of Munich, Germany.
  29. Ulrich Doraszelski & Jordi Jaumandreu, 2013. "R&D and Productivity: Estimating Endogenous Productivity," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1338-1383.
  30. Stefan Lachenmaier & Horst Rottmann, 2007. "Effects of Innovation on Employment: A Dynamic Panel Analysis," CESifo Working Paper Series 2015, CESifo Group Munich.
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  32. Katsoulacos, Y., 1984. "Product innovation and employment," European Economic Review, Elsevier, vol. 26(1-2), pages 83-108.
  33. Carmen Pagés-Serra & Stefano Scarpetta & Gaëlle Pierre, 2009. "Job Creation in Latin America and the Caribbean: Recent Trends and Policy Challenges," IDB Publications (Books), Inter-American Development Bank, number 59978, October.
  34. Rinaldo Evangelista & Antonio Vezzani, 2012. "The impact of technological and organizational innovations on employment in European firms," Industrial and Corporate Change, Oxford University Press, vol. 21(4), pages 871-899, August.
  35. Willem Van Zandweghe, 2010. "Why have the dynamics of labor productivity changed?," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 5-30.
  36. Doms, Mark & Dunne, Timothy & Roberts, Mark J., 1995. "The role of technology use in the survival and growth of manufacturing plants," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 523-542, December.
  37. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  38. Jacques Mairesse & Mohamed Sassenou, 1991. "R&D Productivity: A Survey of Econometric Studies at the Firm Level," NBER Working Papers 3666, National Bureau of Economic Research, Inc.
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