Oscillation Effects of Innovation on Employment

On the cusp of a promising era of technological progress and innovation that seeks to deeply alter the essence of employment, recent research indicates that there is no straightforward answer to how these changes will affect the total labour force. This study endeavours to clarify the complex oscillations between these forces. It employs a robust methodological fusion of theoretical frameworks and empirical scrutiny to dissect the innovation-employment nexus within both OECD and non-OECD economies. A dynamic regression model was utilized, integrating employment variables through the total labour force, and innovation metrics through the Innovation Program 5 for OECD countries, along with the Patent Cooperation Treaty for non-OECD countries. The analysis favoured the robust two-step SYS-GMM estimator over various estimations, including the DIF-GMM, uncovering a positive relationship effect between innovation and employment. Specifically, the study reveals that the IP5 exerts a significant positive effect on the labour force within OECD countries, endorsing the labour-friendly nature of innovation. Conversely, the PCT demonstrates a marked beneficial effect on employment in non-OECD countries. These insights shed light on the nuanced and favourable interplay between innovation and employment across diverse economies, accentuating the temporal and interdependent nature of their association. The need for in-depth knowledge of innovation and its specific effects on employment is crucial for policy-makers. This entails the development of tailored policies and strategic plans intended for the patenting and exploiting innovations aiming at strengthening employment in its economic environment, in specific business environments and taking account of temporal and contextual factors.