Investment, innovation activities and employment across European regions

Sergio Destefanis and Naqeeb Ur Rehman

Structural Change and Economic Dynamics, 2023, vol. 65, issue C, 474-490

Abstract: This study examines the effect of various forms of investment expenditure (gross fixed capital formation, R&D and European Structural and Investment Funds) on employment across NUTS2 European regions from 2000 to 2016. We find that the effect of R&D is heavily conditional upon regional characteristics. Only in NUTS2 regions with medium to high levels of innovation is R&D likely to generate employment. Gross fixed capital formation is labour friendly, but less so in highly innovative regions. Accordingly, the more that European regions shift closer to the world's technology frontier, the more that R&D expenditure, rather than investment in physical assets, will be capable of generating positive employment externalities. Amongst European Structural and Investment Funds, we find an especially significant effect for the European Agricultural Fund for Rural Development (in the more developed regions) and the Cohesion Fund.

Keywords: Gross fixed capital formation; ESIF; R&D; Cohesion policy; Labour demand (search for similar items in EconPapers)
JEL-codes: E24 O32 O33 O38 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:65:y:2023:i:c:p:474-490

DOI: 10.1016/j.strueco.2023.03.013

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