2011
DOI: 10.1016/j.ijindorg.2010.05.004
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Effects of innovation on employment: A dynamic panel analysis

Abstract: This paper estimates the effect of innovation on employment at the firm level. Our uniquely long innovation panel data set of German manufacturing firms covers more than 20 years and allows us to use various innovation measures. We can distinguish between product and process innovations as well as between innovation inputs and innovation outputs. Using dynamic panel GMM system estimation we find positive effects of innovation on employment. This result is robust to the use of product and process innovations as… Show more

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Cited by 264 publications
(183 citation statements)
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References 27 publications
(13 reference statements)
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“…The magnitude of this effect is determined by the size of the price reduction, the elasticity of demand and the reactions of competitors to the price reduction. Empirical evidence for this price effect is provided by König, Licht and Buscher (1995), Greenan and Guellec (2000), Smolny (2002) or Lachenmaier and Rottmann (2011) who all find significantly positive overall employment effects of process innovations.…”
Section: Literature Background and Hypothesesmentioning
confidence: 97%
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“…The magnitude of this effect is determined by the size of the price reduction, the elasticity of demand and the reactions of competitors to the price reduction. Empirical evidence for this price effect is provided by König, Licht and Buscher (1995), Greenan and Guellec (2000), Smolny (2002) or Lachenmaier and Rottmann (2011) who all find significantly positive overall employment effects of process innovations.…”
Section: Literature Background and Hypothesesmentioning
confidence: 97%
“…Empirical evidence suggests that the combined effect of positive compensation effects and negative externalities due to cannibalisation and displacement effects is positive, resulting in employment growth at the firm level (Hall, Lotti and Mairesse 2008;Lachenmaier and Rottmann 2011;Harrison et al 2014) and also at the industry level when taking additional negative externalities due to business stealing into account (Bogliacino and Pianta 2010). Moreover, negative externalities from business stealing are considerably smaller than the positive spillovers from R&D activity, leading to positive gross social returns to R&D (Bloom, Schankerman and Van Reenen 2013).…”
Section: Literature Background and Hypothesesmentioning
confidence: 99%
“…Specifically, it may have a negative impact on job creation because it reduces the effect of labor input (Lachenmaier and Rottmann 2011). On the contrary, some studies showed that process innovation positively affects job creation, especially in the long run (Hong et al 2010).…”
Section: Innovation Activity and Job Creationmentioning
confidence: 99%
“…Sofern die Etablierung eines neuen Produktes die Nachfrage stimuliert, kann dies auf betrieblicher Ebene zur Einstellung neuer Arbeitskräfte führen, wodurch mit einem positiven Beschäftigungseffekt zu rechnen ist. Wenn allerdings ein neues Produkt ein bestehendes Produkt ersetzt, kann dies auf betrieblicher Ebene zur Folge haben, dass neue Arbeitskräfte die bestehenden aufgrund steigender Anforderungsprofile ersetzen oder weniger Arbeitskräfte für die Produktion des neuen Produkts benötigt werden, was in einem nicht eindeutigen Beschäftigungseffekt, d. h. in einem positiven oder in einem negativen Beschäftigungseffekt, nach einer Produktinnovation mündet (Lachenmaier -Rottmann, 2007). Dehio et al (2005) zufolge können Beschäftigungsverluste, die aus der Einführung kostensenkender Prozessinnovationen resultieren, möglicherweise durch Umsatzsteigerungen kompensiert werden und sich entsprechend in der Belegschaftsgröße niederschlagen, weshalb auch bei Prozessinnovationen die "Richtung" des zu erwartenden Beschäftigungseffektes nicht eindeutig vorhersehbar ist.…”
Section: Theoretische üBerlegungenunclassified