The employment impact of product innovations in sub-Saharan Africa: Firm-level evidence

Abstract

Innovation has become a key interest in sub-Saharan Africa (SSA), as it is argued to be pervasive, and play eminent role in generating employment. There is, however, a dearth of empirical evidence assessing the impact of innovation on firm employment for SSA. This paper investigates the impact of product innovations on job creation using data from the recent waves of the Enterprise Survey merged with Innovation Follow-Up Survey for SSA countries for which both surveys are available. We apply the Dose Response Model under continuous and heterogeneous responses to treatment. The results reveal a positive impact of product innovations on total employment. This result is, however, found to hold only at specific intervals of product innovation intensities. Our analyses also show that product innovations tend to create both temporary and permanent jobs as well as skilled and unskilled jobs. However, the positive impact of product innovations on temporary and unskilled employment tends to outweigh that of permanent and skilled employment, raising questions about the security and quality of the new jobs generated by product innovations.

Innovation and the performance of informal enterprises in developing countries: a gender perspective

“…In terms of the econometric analysis, the paper applies the Dose Response Treatment Model (DRTM) developed by Cerulli (2012aCerulli ( , 2015 and used by Cerulli and Poti (2014), Baum and Cerulli (2016) and Avenyo et al (2019). In this paper, the DRTM assesses the heterogeneous impact of gender and product innovation on the employment performance of enterprises, allowing us to resolve econometric issues such as endogeneity and selection bias.…”

“…3.2.1 Description of model. To test the simultaneous impact of gender on product innovativeness, and the impact of gender and product innovativeness on employment performance, we followed Cerulli (2012b), Cerulli and Poti (2014) and Avenyo et al (2019) to specify our DRTM estimation equations into a system of the structural model as:…”

“…384-385). Given that firms self-select into innovation activities (Avenyo et al, 2019), Equations ( 1) and ( 2) are specified as a Type II Tobit model (Amemiya, 1985) where equation ( 2) regresses a vector of explanatory variables x 1 that influences the decision of an enterprise to innovate or not to innovate and equation ( 3) defines the vector of explanatory variables, x 2 , that determines the performance of product innovation. The Type II Tobit model estimated using maximum likelihood are identified in the empirical literature to generate more efficient estimates than those obtained from the Heckman selection models, for instance (Avenyo et al, 2020;Amemiya, 1985).…”

“…The economic development literature recognises innovation as a key driver of economic progress, competitiveness and a major avenue for decent job creation (Schumpeter, 1934;Verspagen, 1992;Kraemer-Mbula and Wamae, 2010a;Avenyo et al, 2019). As a result, most countries aim to stimulate innovation activities in all enterprises, including micro-and small-scale enterprises (MSEs).…”

Technological Innovations and Labor Demand Using Linked Firm-Level Data

“…A major difference between the CIS and the World Bank enterprise survey is that the latter lack questions about turnover from market novelties. Recent applications include Avenyo et al (2019) as well as Cirera and Sabetti (2019). The majority of innovation surveys covers both manufacturing and service firms, except the EFIGE and the ESEE, who are limited to the former.…”