Innovation, Creative Destruction and Structural Change: Firm-level Evidence from European Countries

Bernhard Dachs, Martin Hud, Christian Köhler and Bettina Peters ()

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: The shift of employment from lower to higher productive firms is an important driver for structural change and industry dynamics. We investigate this reallocation in terms of employment gains and losses from innovation. New employment created by product innovation may be offset by employment losses in related products, known as ‘cannibalisation’ or ‘business stealing’ effects in the literature, by employment losses from process and organisational innovation and by general productivity increases. The paper investigates this effect empirically with a large dataset from the European Community Innovation Survey (CIS). We find that employment gains and losses increase with technology intensity of the sector. High-technology manufacturing shows the strongest employment gains and losses from innovation, followed by knowledge-intensive services, low- technology manufacturing and less knowledge-intensive services. The net contribution of innovation to employment growth is mostly positive, an exception being manufacturing industries in recession periods.

Keywords: Innovation; employment; reallocation; technology intensity; compensation effect; displacement effect; cannibalisation effect. (search for similar items in EconPapers)
JEL-codes: C26 D2 J23 O33 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cse, nep-eur, nep-ino, nep-lma, nep-sbm, nep-tid and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Innovation, creative destruction and structural change: firm-level evidence from European countries (2017)
Working Paper: Innovation, creative destruction and structural change: Firm-level evidence from European Countries (2016)
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