Job Creation Effects of R&D Expenditures: Are High-tech Sectors the Key?

In this paper we assess the job creation effect of R&D expenditures, using a unique longitudinal database of 677 European companies over the period 1990-2008. We estimate a dynamic labour demand specification using a Least Squares Dummy Variable Corrected (LSDVC) technique. The labour-friendly nature of R&D emerges from the empirical analysis on the overall sample. However, this positive significant effect corresponds to the high-tech sector and services, while the effect is not significant for traditional manufacturing. The results support the policy agenda of promoting structural change in European economies.