The employment effects of innovations in high-tech industries

Arbeitspapier

The issue of technological unemployment receives perennial popular attention. Although there are previous empirical investigations that have focused on the relationship between innovation and employment, the originality of our approach lies in our choice of method. We focus on four 2-digit manufacturing industries that are known for their high patenting activity. We then use Principal Components Analysis to generate a firm- and year-specific 'innovativeness' index by extracting the common variance in a firm's patenting and R&D expenditure histories. To begin with, we explore the heterogeneity of firms by using semi-parametric quantile regression. Whilst some firms may reduce employment levels after innovating, others increase employment. We then move on to a weighted least squares (WLS) analysis, which explicitly takes into account the different job-creating potential of firms of different sizes. As a result, we focus on the effect of innovation on total number of jobs, whereas previous studies have focused on the effect of innovation on firm behavior. Indeed, previous studies have typically taken the firm as the unit of analysis, implicitly weighting each firm equally according to the principle of 'one firm equals one observation'. Our results suggest that firm-level innovative activity leads to employment creation that may have been underestimated in previous studies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Papers on Economics and Evolution ; No. 0705

Classification and Topics

• Classification: Wirtschaft ; Firm Performance: Size, Diversification, and Scope ; Technological Change: Choices and Consequences; Diffusion Processes ; Labor Economics: General
• Subject: Technological Unemployment ; Innovation ; Firm Growth ; Weighted Least Squares ; Aggregation ; Quantile Regression ; Innovation ; Hochtechnologiesektor ; Beschäftigungseffekt ; Technischer Fortschritt ; Arbeitslosigkeit ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Coad, Alexander ; Rao, Rekha
• Event: Veröffentlichung
• (who): Max Planck Institute of Economics
• (where): Jena
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/31811
• Last update: 10.03.2025, 11:44 AM CET