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Employment Impacts of Market Novelty Sales: Evidence for Nine European Countries

Martin Falk () and Eva Hagsten
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Eva Hagsten: University of Iceland, Postal: The Ratio InstituteP.O. Box 5095SE-102 42 StockholmSweden

No 293, Ratio Working Papers from The Ratio Institute

Abstract: This study investigates the impact of new market product (market novelty) sales on labour demand (employment). Based on a two-output cost function (market novelties and existing products) a relative employment equation is derived with the ratio of labour to material inputs as dependent variables. The relative labour demand model is estimated using biennial data for 25 industries, nine European countries and five time periods (2002-2010) or by use of a sizeclass dataset with broad industry groups. System GMM estimations accounting for endogeneity show that the turnover (sales) of market novelties (in relation to existing products) has a significant impact on relative employment in manufacturing industries. On average, an increase in the relative turnover of new market products by one percentage point is associated with a 1.6 per cent increase in the employment ratio. In contrast, employment in service industries does not benefit from new market products but instead from the intensity with which information and communication technology innovations are used, approximated by the proportion of broadband internet connected employees. When instead the size-class dataset is employed, it becomes clear that market novelties primarily drive employment in small firms.

Keywords: Cross-country panel data; labour demand; product innovations; new market products; broadband internet. (search for similar items in EconPapers)
JEL-codes: J23 O33 O57 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur
Date: 2017-11-07
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