IDEAS home Printed from https://ideas.repec.org/a/wly/ijfiec/v27y2022i1p1208-1219.html
   My bibliography  Save this article

Innovation—Unemployment Nexus: The case of EU countries

Author

Listed:
  • Durmuş Çagri Yildirim
  • Seda Yildirim
  • Seyfettin Erdogan
  • Tugba Kantarci

Abstract

In order to achieve a sustainable growth and development process in a globalised competitive environment, the effect of monitoring the technological developments of the national economies is a necessity. Innovation, shown as a cause of technological developments, contributes to the transformation of technology into social and economic benefits. Innovation changes the structure of employment. However, there is no consensus in the literature about how innovation affects employment. Some suggest that technological innovations will lead to an increase in unemployment as a result of the substitution of machines instead of labour. The others state that technological innovations can improve the working life and create a reducing effect of unemployment as a result of every technological innovation creating their own fields of work. The aim of this study is to examine the effects of innovation on unemployment. The data of 12 EU countries with high and relatively low level of innovation were analysed with the panel threshold model for the period of 1998–2015. Innovation in high and low regimes, has effects that will increase unemployment. Technological development increases the unemployment rate in both country groups in both regimes of innovation level.

Suggested Citation

  • Durmuş Çagri Yildirim & Seda Yildirim & Seyfettin Erdogan & Tugba Kantarci, 2022. "Innovation—Unemployment Nexus: The case of EU countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1208-1219, January.
    • Handle: RePEc:wly:ijfiec:v:27:y:2022:i:1:p:1208-1219
    DOI: 10.1002/ijfe.2209
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/ijfe.2209
    Download Restriction: no
    File URL: https://libkey.io/10.1002/ijfe.2209?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Van Reenen, John, 1997. "Employment and Technological Innovation: Evidence from U.K. Manufacturing Firms," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 255-284, April.
    2. Massimiliano Tancioni & Roberto Simonetti, 2002. "A Macroeconometric Model for the Analysis of the Impact of Technological Change and Trade on Employment," Journal of Interdisciplinary Economics, , vol. 13(1-3), pages 185-221, January.
    3. Lachenmaier, Stefan & Rottmann, Horst, 2011. "Effects of innovation on employment: A dynamic panel analysis," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 210-220, March.
    4. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    5. Jacques Mairesse, 2008. "Employment, innovation, and productivity: evidence from Italian microdata," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 17(4), pages 813-839, August.
    6. Priscilla Twumasi Baffour & F. Ebo Turkson & Agyapomaa Gyeke-Dako & Abena D. Oduro & Emmanuel Nii Abbey, 2020. "Innovation and employment in manufacturing and service firms in Ghana," Small Business Economics, Springer, vol. 54(4), pages 1153-1164, April.
    7. Nathalie Greenan & Dominique Guellec, 2000. "Technological Innovation and Employment Reallocation," LABOUR, CEIS, vol. 14(4), pages 547-590, December.
    8. Sudharshan Reddy Paramati & Thanh Pham Thien Nguyen, 2019. "Does financial market growth improve income distribution? A comparison of developed and emerging market economies of the global sample," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 24(1), pages 629-646, January.
    9. Horst Feldmann, 2013. "Technological unemployment in industrial countries," Journal of Evolutionary Economics, Springer, vol. 23(5), pages 1099-1126, November.
    10. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    11. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    12. Ming-Liang Yeh & Hsiao-Ping Chu & Peter Sher & Yi-Chia Chiu, 2010. "R&D intensity, firm performance and the identification of the threshold: fresh evidence from the panel threshold regression model," Applied Economics, Taylor & Francis Journals, vol. 42(3), pages 389-401.
    13. d’Artis Kancs & Boriss Siliverstovs, 2020. "Employment effect of innovation," Empirical Economics, Springer, vol. 59(3), pages 1373-1391, September.
    14. Blechinger, Doris & Kleinknecht, Alfred & Licht, Georg & Pfeiffer, Friedhelm, 1998. "The impact of innovation on employment in Europe: An analysis using CIS data," ZEW Dokumentationen 98-02, ZEW - Leibniz Centre for European Economic Research.
    15. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    16. Erdoğan, Seyfettin & Yıldırım, Durmuş Çağrı & Gedikli, Ayfer, 2020. "Natural resource abundance, financial development and economic growth: An investigation on Next-11 countries," Resources Policy, Elsevier, vol. 65(C).
    17. Thomas E. Lambert & Gary A. Mattson & Kyle Dorriere, 2017. "The impact of growth and innovation clusters on unemployment in US metro regions," Regional Science Policy & Practice, Wiley Blackwell, vol. 9(1), pages 25-37, March.
    18. Hansen, Bruce E, 1996. "Inference When a Nuisance Parameter Is Not Identified under the Null Hypothesis," Econometrica, Econometric Society, vol. 64(2), pages 413-430, March.
    19. Kristina Matuzeviciute & Mindaugas Butkus & Akvile Karaliute, 2017. "Do Technological Innovations Affect Unemployment? Some Empirical Evidence from European Countries," Economies, MDPI, vol. 5(4), pages 1-19, December.
    20. Breschi, Stefano & Malerba, Franco & Orsenigo, Luigi, 2000. "Technological Regimes and Schumpeterian Patterns of Innovation," Economic Journal, Royal Economic Society, vol. 110(463), pages 388-410, April.
    21. Van Roy, Vincent & Vértesy, Dániel & Vivarelli, Marco, 2018. "Technology and employment: Mass unemployment or job creation? Empirical evidence from European patenting firms," Research Policy, Elsevier, vol. 47(9), pages 1762-1776.
    22. Yesim Ucdogruk, 2006. "Employment Impact of Product and Process Innovations in Turkey," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 6(1), pages 87-99.
    23. Horst Feldmann, 2013. "Financial system sophistication and unemployment around the world," Applied Economics Letters, Taylor & Francis Journals, vol. 20(16), pages 1491-1496, November.
    24. Mariacristina Piva & Marco Vivarelli, 2005. "Innovation and Employment: Evidence from Italian Microdata," Journal of Economics, Springer, vol. 86(1), pages 65-83, October.
    25. Brouwer, Erik & Kleinknecht, Alfred & Reijnen, Jeroen O N, 1993. "Employment Growth and Innovation at the Firm Level," Journal of Evolutionary Economics, Springer, vol. 3(2), pages 153-159, May.
    26. Bogliacino, Francesco & Piva, Mariacristina & Vivarelli, Marco, 2012. "R&D and employment: An application of the LSDVC estimator using European microdata," Economics Letters, Elsevier, vol. 116(1), pages 56-59.
    27. Bergek, Anna & Berggren, Christian & Magnusson, Thomas & Hobday, Michael, 2013. "Technological discontinuities and the challenge for incumbent firms: Destruction, disruption or creative accumulation?," Research Policy, Elsevier, vol. 42(6), pages 1210-1224.
    28. Gatti, Donatella, 2000. "Unemployment and Innovation Patterns: The Critical Role of Coordination," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 9(3), pages 521-544, September.
    29. Yıldırım, Seda & Gedikli, Ayfer & Erdoğan, Seyfettin & Yıldırım, Durmuş Çağrı, 2020. "Natural resources rents-financial development nexus: Evidence from sixteen developing countries," Resources Policy, Elsevier, vol. 68(C).
    30. Tommaso Antonucci & Mario Pianta, 2002. "Employment Effects of Product and Process Innovation in Europe," International Review of Applied Economics, Taylor & Francis Journals, vol. 16(3), pages 295-307.
    31. Malerba, Franco & Orsenigo, Luigi, 1997. "Technological Regimes and Sectoral Patterns of Innovative Activities," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 6(1), pages 83-117.
    32. Malerba, Franco & Orsenigo, Luigi, 1996. "Schumpeterian patterns of innovation are technology-specific," Research Policy, Elsevier, vol. 25(3), pages 451-478, May.
    33. Horst Feldmann, 2013. "Financial System Sophistication And Unemployment In Industrial Countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 18(4), pages 319-338, October.
    34. Chris Freeman & Luc Soete, 1997. "The Economics of Industrial Innovation, 3rd Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262061953, April.
    35. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    36. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Suhrab, Muhammad & Chen, Pinglu & Ullah, Atta, 2024. "Digital financial inclusion and income inequality nexus: Can technology innovation and infrastructure development help in achieving sustainable development goals?," Technology in Society, Elsevier, vol. 76(C).
    2. Imran Hussain Shah & Konstantinos Kollydas & Pak Yee Lee & Issam Malki & Crystal Chu, 2024. "Does R&D investment drive employment growth? Empirical evidence at industry level from Japan," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 102-118, January.
    3. Ylenia Curci & Nathalie Greenan & Silvia Napolitano, 2024. "Innovating for the good or for the bad. An EU-wide analysis of the impact of technological transformation on job polarisation and unemployment," TEPP Working Paper 2024-02, TEPP.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vincent Van Roy & Daniel Vertesy & Marco Vivarelli, 2015. "The Employment Impact of Innovation: Evidence from European Patenting Companies," DISCE - Quaderni del Dipartimento di Politica Economica ispe0075, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    2. Heijs, Joost & Arenas Díaz, Guillermo & Vergara Reyes, Delia Margarita, 2019. "Impact of innovation on employment in quantitative terms: review of empirical literature based on microdata," MPRA Paper 95326, University Library of Munich, Germany.
    3. Van Roy, Vincent & Vértesy, Dániel & Vivarelli, Marco, 2018. "Technology and employment: Mass unemployment or job creation? Empirical evidence from European patenting firms," Research Policy, Elsevier, vol. 47(9), pages 1762-1776.
    4. Van Roy, Vincent & Vertesy, Daniel & Vivarelli, Marco, 2015. "Innovation and Employment in Patenting Firms: Empirical Evidence from Europe," IZA Discussion Papers 9147, Institute of Labor Economics (IZA).
    5. Matteo Lucchese & Mario Pianta, 2012. "Innovation and Employment in Economic Cycles," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(2), pages 341-359, June.
    6. Mariacristina Piva & Marco Vivarelli, 2017. "The employment impact of R&D expenditures and capital formation," DISCE - Quaderni del Dipartimento di Politica Economica ispe0078, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    7. Mariacristina Piva & Marco Vivarelli, 2018. "Technological change and employment: is Europe ready for the challenge?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 8(1), pages 13-32, March.
    8. Piva, Mariacristina & Vivarelli, Marco, 2017. "Technological Change and Employment: Were Ricardo and Marx Right?," IZA Discussion Papers 10471, Institute of Labor Economics (IZA).
    9. Kristina Matuzeviciute & Mindaugas Butkus & Akvile Karaliute, 2017. "Do Technological Innovations Affect Unemployment? Some Empirical Evidence from European Countries," Economies, MDPI, vol. 5(4), pages 1-19, December.
    10. Nor-Eddine Oumansour & M'ssiyah Sakhr, 2024. "Innovation and employment: Estimation on a panel of countries using the software Stata," French Stata Users' Group Meetings 2024 34, Stata Users Group.
    11. Horst Feldmann, 2013. "Technological unemployment in industrial countries," Journal of Evolutionary Economics, Springer, vol. 23(5), pages 1099-1126, November.
    12. Mehmet Ugur & Sefa Awaworyi Churchill & Edna Solomon, 2018. "Technological Innovation And Employment In Derived Labour Demand Models: A Hierarchical Meta†Regression Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 50-82, February.
    13. Aldieri, Luigi & Garofalo, Antonio & Vinci, Concetto Paolo, 2015. "R&D Spillovers and Employment: A Micro-econometric Analysis," MPRA Paper 67269, University Library of Munich, Germany.
    14. Harrison, Rupert & Jaumandreu, Jordi & Mairesse, Jacques & Peters, Bettina, 2014. "Does innovation stimulate employment? A firm-level analysis using comparable micro-data from four European countries," International Journal of Industrial Organization, Elsevier, vol. 35(C), pages 29-43.
    15. Chee‐Hong Law & Siong Hook Law, 2024. "The non‐linear impacts of innovation on unemployment: Evidence from panel data," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 402-424, January.
    16. Luigi Aldieri & Concetto Paolo Vinci, 2018. "Green Economy and Sustainable Development: The Economic Impact of Innovation on Employment," Sustainability, MDPI, vol. 10(10), pages 1-11, October.
    17. Dosi, G. & Piva, M. & Virgillito, M.E. & Vivarelli, M., 2021. "Embodied and disembodied technological change: The sectoral patterns of job-creation and job-destruction," Research Policy, Elsevier, vol. 50(4).
    18. Gabriele Pellegrino & Mariacristina Piva & Marco Vivarelli, 2019. "Beyond R&D: the role of embodied technological change in affecting employment," Journal of Evolutionary Economics, Springer, vol. 29(4), pages 1151-1171, September.
    19. Mariacristina Piva & Marco Vivarelli, 2018. "Is Innovation Destroying Jobs? Firm-Level Evidence from the EU," Sustainability, MDPI, vol. 10(4), pages 1-16, April.
    20. Francesco Bogliacino & Mariacristina Piva & Marco Vivarelli, 2014. "Technology and employment: the job creation effect of business R&D," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 122(3), pages 239-264.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:ijfiec:v:27:y:2022:i:1:p:1208-1219. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.interscience.wiley.com/jpages/1076-9307/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.