Employment Effects of Innovation at the Firm Level

This paper analyzes empirically the effects of innovation onemployment at the firm level using a uniquely long panel dataset ofGerman manufacturing firms. The overall effect of innovations onemployment often remains unclear in theoretical contributions dueto reverse effects. We distinguish between product and processinnovations and additionally introduce different innovationcategories. We find clearly positive effects for product and processinnovations on employment growth with the effects for processinnovations being slightly higher. For product innovations thatinvolved patent applications we can identify an additional positiveeffect on employment.