Labor market reform and innovation: Evidence from Spain
Richard Kneller and
Joel Stiebale ()
Research Policy, 2021, vol. 50, issue 5
We analyze the effect of a labor market reform on firms’ product innovation. The reform, which amounts to a natural experiment, differentially reduced firing costs for some firms, thereby lowering adjustment costs in the presence of demand uncertainty. Using a difference-in-differences framework, we show that the reform increased product innovations. We also provide evidence that the reform induced upgrading of product quality and enabled firms to grow faster and enter new markets. The effects are concentrated in industries with high levels of demand volatility and R&D intensity, where flexible adjustments to unexpected shocks are important.
Keywords: Innovation; New products; Productivity; Labor market reform; EPL (search for similar items in EconPapers)
JEL-codes: D22 G31 J3 O31 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Labor market reform and innovation: Evidence from Spain (2020)
Working Paper: Labour market reform and innovation: Evidence from Spain (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:50:y:2021:i:5:s0048733321000172
Access Statistics for this article
Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray
More articles in Research Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().