Does R&D investment drive employment growth? Empirical evidence at industry level from Japan

Abstract

Strong demographic headwinds have motivated Japan to strengthen its economy by fostering innovation. This paper draws on a panel of business enterprises operating in 33 industries in Japan to examine how research and development (R&D) activities affect employment. Our findings suggest that employment gains are associated with innovation, both at the aggregate level and within groups of major industries. The positive impact of technological advancement is more pronounced in the manufacturing sector. The results reveal heterogeneous patterns of the key determinants of employment growth based on the level of industries' routine intensity, but they accord well with the compensation theory concerning the connection between innovation and job creation. These results will be of interest for policymakers to design targeted economic strategies by supporting technological development in Japan and could also serve as a compass for other countries with similar workforce structures and macroeconomic characteristics.

The nonlinear impact of technologies import on industrial employment: A panel threshold regression approach

“…Shah et al [ 45 ], in their study on industrial employment in Japan from 2002 to 2017, suggest that the impact of technological progress is positive at the aggregate level. This study introduces the link between technology and the intensity of routine tasks into its analysis and highlights the existence of various patterns of factors that influence employment growth depending on the degree of routine task intensity in industries.…”

The Effect of Innovation on Employment in Türkiye

“…During 1999-2005 period in German regions Buerger et al (2012) observe that an increase in patents is associated with subsequent growth of employment in the medical and optical equipment, and electrics and electronics industries. The growth of patents is also associated with subsequent growth of R&D. In a multi-industry work done for Japanese economy, Shah et al (2022) argue that employment gains are associated with innovation, both at the aggregate level and within groups of major industries, with the positive impact of technological progress being more highlighted in the manufacturing sector. Pellegrino et al (2019) and Barbieri et al (2019) investigate the nexus between innovation and employment for Spanish and Italian firms, respectively.…”