Publication: The Effects of Innovation on Employment in Developing Countries: Evidence from Enterprise Surveys
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Date
2016-08
ISSN
Published
2016-08
Author(s)
Abstract
While existing evidence in advanced
economies suggests a possible role for technological
innovation in job creation, its role in developing countries
remains largely undocumented. This paper sheds light on the
direct impact of technological as well as organizational
innovation on firm level employment growth based on the
theoretical model of Harrison, Jaumandreu, Mairesse, and
Peters (2014) using a sample of over 15,000 firms in Africa,
South Asia, Middle East and North-Africa and Eastern Europe
and Central Asia. The results suggest that new sales
associated with product innovations tend to be produced with
just as much or higher levels of labor intensity. The effect
is largest in lower income countries and the African region,
where firms are further away from the technological
frontier. More importantly, process innovations that involve
automation of production do not have a short-term negative
impact on firm employment. However, there is some evidence
of a negative effect of automation on employment that
manifests in increases in efficiency that reduce the
elasticity of new sales to employment. Overall, these
results are qualitatively similar to previous findings in
advanced economies and highlight a positive direct role of
innovation on the quantity of employment but at a decreasing
rate as firms’ transition to the technological frontier.
Link to Data Set
Citation
“Cirera, Xavier; Sabetti, Leonard. 2016. The Effects of Innovation on Employment in Developing Countries: Evidence from Enterprise Surveys. Policy Research Working Paper;No. 7775. © World Bank, Washington, DC. http://hdl.handle.net/10986/24857 License: CC BY 3.0 IGO.”
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