More and Better Jobs, But Not for Everyone: Effects of Innovation in French Firms

Abstract

The authors analyze the effect of technological innovation on employment and job quality using a difference-in-differences matching model and a unique matched data set of French firms (the Community Innovation Survey with administrative and fiscal data). Overall, they find evidence that product innovation increases employment and certain dimensions of job quality, such as the number of permanent contracts and working hours. The authors consider this virtuous circle between innovation, employment, and job quality to be nuanced, however, for two reasons. First, not all social groups benefit from firm innovation, as lower-skilled workers are less positively affected in terms of employment and are sometimes negatively affected in terms of wages. Second, the positive effects of innovation appear mainly in manufacturing and not in services. Public policy should pay attention, then, to the consequences of innovation across individuals and sectors to ensure that innovation is beneficial to all.