Innovation—Unemployment Nexus: The case of EU countries

Abstract

In order to achieve a sustainable growth and development process in a globalised competitive environment, the effect of monitoring the technological developments of the national economies is a necessity. Innovation, shown as a cause of technological developments, contributes to the transformation of technology into social and economic benefits. Innovation changes the structure of employment. However, there is no consensus in the literature about how innovation affects employment. Some suggest that technological innovations will lead to an increase in unemployment as a result of the substitution of machines instead of labour. The others state that technological innovations can improve the working life and create a reducing effect of unemployment as a result of every technological innovation creating their own fields of work. The aim of this study is to examine the effects of innovation on unemployment. The data of 12 EU countries with high and relatively low level of innovation were analysed with the panel threshold model for the period of 1998-2015. Innovation in high and low regimes, has effects that will increase unemployment. Technological development increases the unemployment rate in both country groups in both regimes of innovation level.

Technology and jobs: A systematic literature review

“…Morrison and Siegel (2001) and Kim and Kim (2020) observed a positive relationship between R&D expenditures and employment of high-skill labor. Fagerberg et al (1997), Van Roy et al (2018), andYildirim et al (2020) all documented a positive relationship between R&D and labor, whereas Van Roy et al (2018) found that this only holds in high-but not in low-tech industries. Vainiomaki and Laaksonen (1999) found that high-technology sectors, measured by R&D intensity, have the highest job creation rates.…”

“…Twenty studies fall into the residual category other/indirect. Among these, Fagerberg et al (1997), Feldmann (2013, Kim and Kim (2020), Morrison and Siegel (2001), Vainiomaki and Laaksonen (1999), Van Roy et al (2018), andYildirim et al (2020) used R&D expenditures or patents as a measure of technological change. Morrison and Siegel (2001) and Kim and Kim (2020) observed a positive relationship between R&D expenditures and employment of high-skill labor.…”

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

“…Using World Bank data for the years 1998-2015, Yildirim et al (2022 clustered 12 European countries into two groups according to their innovation levels. By adopting panel threshold regressions, they find that innovation (measured by patent applications) increases unemployment across both groups of countries, although the negative impact is more pronounced in countries with low-innovation regimes.…”

Geleceğin İşgücü İçin Teknolojinin Yükselişi: OECD Ülkelerinde Teknoloji ve İşsizlik Arasındaki Bağlantı

“…The panel threshold model of Yildirim et al (2020) shows that technological development increases the unemployment rate for the period of 1998-2015 in EU countries. Bordot (2022) found that a 10% increase in the stock of industrial robots is associated with a 0.42-point increase in the unemployment rate in OECD countries between the years 2005 and 2017.…”

“…Although there is a wide range of empirical literature, there is no consensus on the relationship between technology and unemployment (Yildirim, Yildirim, Erdogan & Kantarci, 2020). To grasp this, it is vital to determine the two competing effects technology exercises on employment.…”