The Impact of Innovation Activities on Employment in the Environmental Sector - Empirical Results for Germany at the firm Level

The paper explores employment effects of environmental product innovations at the firm level. Whereas there are many studies analysing this relationship for general innovations, studies for the environmental sector are still rare. On the background of high political attention connected with hopeful employment perspectives, a separate analysis of this sector in comparison to other, non-environmental fields seems to be very important. The empirical analysis is based on the establishment panel of the Institute for Employment Research (Nuremberg). The econometric results show that the influence of environmental innovation activities on the employment development is significantly positive and the quanti-tative impact seems to be larger than in other, non-environmental fields. Within a bivariate probit model, the determinants of environmental innovation activities are also explored. They may be interpreted as indirect influences on the employment development of the firm. The results show that the improvement of the innovative capacities by R&D and further education measures and the existence of highly qualified human capital are significantly important for the development of new products in the environmental sector.