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Does innovation stimulate employment? A firm-level analysis using comparable micro data on four European countries

Rupert Harrison, Jordi Jaumandreu (), Jacques Mairesse () and Bettina Peters ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies the impact of process and product innovations introduced by firms on their employment growth. A model that relates employment growth to process innova- tions and to the growth of sales due to innovative and unchanged products is derived and estimated using a unique source of comparable firm-level data from France, Germany, Spain and the UK. Results for manufacturing show that, although process innovation tends to displace employment, compensation e ffects are prevalent, and product innova- tion is associated with employment growth. In the service sector there is less evidence of displacement e ffects, and growth in sales of new products accounts for a non-negligible proportion of employment growth. Overall the results are similar across countries, with some interesting exceptions.

Keywords: process innovations; product innovations; employment; growth (search for similar items in EconPapers)
JEL-codes: L20 (search for similar items in EconPapers)
Date: 2005
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