Working Paper: NBER ID: w13296
Authors: Bronwyn H. Hall; Francesca Lotti; Jacques Mairesse
Abstract: Italian manufacturing firms have been losing ground with respect to many of their European competitors. This paper presents some empirical evidence on the effects of innovation on employment growth and therefore on firms' productivity with the goal of understanding the roots of such poor performance. We use firm level data from the last three surveys on Italian manufacturing firms conducted by Mediocredito-Capitalia, which cover the period 1995-2003. Using a slightly modified version of the model proposed by Harrison, Jaumandreu, Mairesse and Peters (HJMP 2005), which separates employment growth rates into those associated with old and new products, we find no evidence of significant employment displacement effects stemming from process innovation. The sources of employment growth during the period are split equally between the net contribution of product innovation and the net contribution from sales growth of old products. However, the contribution of product innovation to employment growth is somewhat lower than in the four European countries considered in HJMP 2005, and the contribution of innovation in general to productivity growth is almost nil in Italy during this period.
Keywords: Innovation; Employment Growth; Productivity; Italian Manufacturing
JEL Codes: D24; J0; J20; L20; O30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| process innovation (O31) | employment displacement effect (J65) |
| product innovation (O35) | employment growth (O49) |
| sales growth of old products (O41) | employment growth (O49) |
| product innovation (O35) | productivity growth (O49) |
| noninnovating firms (O31) | productivity decline (O49) |