published in: Journal of Economics, 2005, 86(1), 65-83
The microeconomic empirical literature devoted to the link between innovation and
employment tends to suggest that technological change has a positive effect on jobs, at least
at the level of the firm. The main purpose of this paper is to see whether this result still holds
in a situation where intermediate technologies are implemented mainly through gross
innovative investments, as in Italian manufacturing.
Applying GMM-SYS to an employment equation augmented for technology and using a
unique longitudinal dataset of 575 Italian manufacturing firms over the period 1992-1997, this
paper finds a significant - although small in size - positive relationship between innovation
and employment. While the links with sales and wages have the expected signs and turn out
to be significant, the job creating impact of innovation proves robust after checking for time,
industry, firm's size and geographical fixed effects.
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