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Employment Effect of Innovation

d'Artis Kancs and Boriss Siliverstovs

No 17-428, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: The present paper estimates and decomposes the employment e?ect of innovation by R&D intensity levels. Our micro-econometric analysis is based on a large international panel data set from the EU Industrial R&D Investment Scoreboard. Employing ?exible semi-parametric methods – the generalised propensity score – allows us to recover the full functional relationship between the R&D investment and ?rm employment, and to address important econometric issues, which is not possible in the standard estimation approach used in the previous literature. Our results suggest that modest innovators do not create and may even destruct jobs by raising their R&D expenditures. Most of the jobs in the economy are created by innovation followers: increasing innovation by 1% may increase employment up to 0.7%. The job creation e?ect of innovation reaches its peak when the R&D intensity is around 100% of the total capital expenditure, after which the positive employment e?ect declines and becomes statistically insigni?cant. Innovation leaders do not create jobs by further increasing their R&D expenditures, which are already very high.

New Economics Papers: this item is included in nep-cse, nep-eur, nep-ino, nep-sbm and nep-tid
Date: 2017-02
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http://dx.doi.org/10.3929/ethz-a-010852605 (application/pdf)

Related works:
Working Paper: Employment Effect of Innovation (2019) Downloads
Working Paper: Employment Effect of Innovation (2015) Downloads
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