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Do Labor Market Regulations Affect the Link between Innovation and Employment?: Evidence from Latin America

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  • Baensch, Laura
  • Lanzalot, María Laura
  • Lotti, Giulia
  • Stucchi, Rodolfo

Abstract

The link between innovation and employment is at the center of the policy debate. This paper sheds light on how labor market regulations affect the relationship between different types of innovation and employment in Latin America. We estimate the model developed by Harrison et al. (2014) using Enterprise Surveys for 14 Latin American countries. We find that: (i) product innovations have a positive impact on employment growth; (ii) process innovations do not affect employment growth; (iii) more rigid labor market regulations (minimum wages and severance payments) reduce the effects of innovation.

Suggested Citation

  • Baensch, Laura & Lanzalot, María Laura & Lotti, Giulia & Stucchi, Rodolfo, 2018. "Do Labor Market Regulations Affect the Link between Innovation and Employment?: Evidence from Latin America," IDB Publications (Working Papers) 8980, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:8980
    DOI: http://dx.doi.org/10.18235/0001199
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    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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