Employment Effects of Technological and Organizational Innovations: Evidence Based on Linked Firm-Level Data for Austria

Abstract

Summary This paper investigates the impact of technological and organizational innovations on subsequent employment growth using a standard labour demand model. The main novelty of the paper is the use of a unique dataset, which merges the Community Innovation Survey (CIS) 2006 for Austria with structural business statistics from 2006-2008, resulting in 3,070 firm observations. For manufacturing firms, quantile regressions show that product innovations lagged two-years have a significantly positive but decreasing impact on employment growth over the conditional distribution given the impact of output and wage growth. For service firms, the positive employment effect of product innovations can only be observed for firms with high conditional employment growth rates. Results are robust with respect to the measurement of product innovations (e.g. market novelties or new to firm products). Process innovations exhibit a negative impact at the higher quantiles indicating that process innovations lead to an increase in labour productivity at the expense of employment. Furthermore organizational and marketing innovations do not have a significant impact on subsequent employment growth across the different quantiles.