Do Labor Market Regulations Affect the Link between Innovation and Employment? Evidence from Latin America

Baensch Laura (), Lanzalot Maria Laura (), Giulia Lotti and Rodolfo Stucchi
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Baensch Laura: Fichtner Management Consulting, Economics & Studies, Stuttgart, Germany
Lanzalot Maria Laura: IDB Invest, Strategy and Development, Esmeralda 130City of Buenos Aires, Argentina

The B.E. Journal of Economic Analysis & Policy, 2019, vol. 19, issue 3, 13

Abstract: This paper sheds light on how labor market regulations affect the relationship between different types of innovation and employment in Latin America. We estimate the effect of process and product innovation on employment growth using Enterprise Surveys for 14 Latin American countries. We calculate the model for the whole sample and then classify countries according to the rigidness of their labor market regulations. We find that: (i) product innovations have a positive impact on employment growth; (ii) process innovations do not affect employment growth; and (iii) more rigid labor market regulations (minimum wages and severance payments) reduce the effects of innovation.

Keywords: process innovation; product innovation; employment growth; labor markets regulations; Latin America (search for similar items in EconPapers)
JEL-codes: D2 J21 J38 L60 O31 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/bejeap-2018-0163

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