Working Paper: NBER ID: w14216
Authors: Rupert Harrison; Jordi Jaumandreu; Jacques Mairesse; Bettina Peters
Abstract: This paper studies the impact of process and product innovations introduced by firms on employment growth in these firms. A simple model that relates employment growth to process innovations and to the growth of sales separately due to innovative and unchanged products is developed and estimated using comparable firm-level data from France, Germany, Spain and the UK. Results show that displacement effects induced by productivity growth in the production of old products are large, while those associated with process innovations, which are likely to be compensated by price decreases, appear to be small. The effects related to product innovations are, however, strong enough to overcompensate these displacement effects.
Keywords: Innovation; Employment; Firm-Level Analysis; European Countries
JEL Codes: D2; J23; L1; O31; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| displacement of labor (J63) | reduction of employment (J63) |
| employment growth due to product innovations (O49) | offset displacement effects from process innovations (O49) |
| process innovations (O31) | displacement of labor (J63) |
| product innovations (O35) | employment growth (O49) |
| new products (O36) | net increase in employment (J68) |
| product innovations in service sector (O35) | employment growth (O49) |