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Technological innovation and the demand for labor by firms in expansion and recession

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  • Javier Ortiz
  • Vicente Salas Fumás

Abstract

With firm data from the Spanish Community Innovation Survey (CIS) for the period 2003–2014, we find a positive and significant effect of innovation in the demand for labor when firms introduce product and process innovations in the same time period. The effect of innovation on the demand for labor is countercyclical, higher in the recession, after 2008, than in the expansion, before 2008, but the probability that firms innovate in product and process is counter-cyclical, i.e. lower in the recession. Altogether, the elasticity of the demand for labor to the probability that firms introduce product and process innovations remains stable throughout the sample period, at around 0.035. Innovation contributes to stabilize average employment during the cycle, more so when the innovation is in product, alone or together with process, than when it is only in process. These results are broadly consistent with product and process innovations shifting firms’ demand and production functions upwards, but differentially in expansions (less product market competition) than in contractions (more competition).

Suggested Citation

  • Javier Ortiz & Vicente Salas Fumás, 2020. "Technological innovation and the demand for labor by firms in expansion and recession," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 29(4), pages 417-440, May.
    • Handle: RePEc:taf:ecinnt:v:29:y:2020:i:4:p:417-440
    DOI: 10.1080/10438599.2019.1629535
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    Cited by:

    1. Eduardo Antonio Chang-Muñoz & Andrés Felipe Guarín-García & Yuneidis Charris-Sevilla & José Fernando Gallego-Nicholls & Cristina Santos-Rojo & Arturo Ortigosa-Blanch, 2023. "Innovation Activities and Their Impact on Product Innovation Results: Evidence from a Sectorial Study," Sustainability, MDPI, vol. 15(8), pages 1-15, April.
    2. Andrea Filippetti & Petros Gkotsis & Antonio Vezzani & Antonio Zinilli, 2020. "Are innovative regions more resilient? Evidence from Europe in 2008–2016," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 807-832, October.
    3. Su, Chi-Wei & Yuan, Xi & Umar, Muhammad & Lobonţ, Oana-Ramona, 2022. "Does technological innovation bring destruction or creation to the labor market?," Technology in Society, Elsevier, vol. 68(C).

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