Does Innovation Shape the Employment Growth Distribution? Evidence from East European Firms

Schneck Stefan (), Nielen Sebastian and Dienes Christian
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Schneck Stefan: Institut für Mittelstandsforschung (IfM), Bonn, Germany
Nielen Sebastian: Institut für Mittelstandsforschung (IfM), Bonn, Germany
Dienes Christian: Institut für Mittelstandsforschung (IfM), Bonn, Germany

Review of Economics, 2023, vol. 74, issue 2, 99-123

Abstract: Employment growth is one of the most crucial indicators for economic policy. Existing studies show that only a small fraction of firms experience high growth rates and create the most new jobs. Making use of recentered influence function regressions, this study examines the effects of process and product innovations on the employment growth distribution. The analysis is based on firm data from Eastern European countries. The effects of process innovation on job creation are ambiguous. An increase in firms with products and services that are new to the market shape the upper tail of the employment growth distribution. Product and service innovations thus cause skewness of the employment growth distribution and are a major determinant of job creation. This study therefore presents evidence on whether and how innovation activities affect employment growth and contributes to the lively debate about how to foster employment growth.

Keywords: employment growth; innovation; product innovation; process innovation (search for similar items in EconPapers)
JEL-codes: L10 L25 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1515/roe-2023-0034

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