Employment, Innovation, and Productivity: Evidence from Italian Microdata
Italian manufacturing firms have been losing ground with respect to many of their European competitors. This paper presents some empirical evidence on the effects of innovation on employment growth and therefore on firms' productivity with the goal of understanding the roots of such poor performance. We use firm level data from the last three surveys on Italian manufacturing firms conducted by Mediocredito-Capitalia, which cover the period 1995-2003. Using a slightly modified version of the model proposed by Harrison, Jaumandreu, Mairesse and Peters (HJMP 2005), which separates employment growth rates into those associated with old and new products, we find no evidence of significant employment displacement effects stemming from process innovation. The sources of employment growth during the period are split equally between the net contribution of product innovation and the net contribution from sales growth of old products. However, the contribution of product innovation to employment growth is somewhat lower than in the four European countries considered in HJMP 2005, and the contribution of innovation in general to productivity growth is almost nil in Italy during this period.
We would like to thank the Mediocredito-Capitalia research department for having kindly supplied firm level data for this project. We thank also an anonymous referee who provided insightful comments, Bettina Peters, Massimo Sbracia, Roberto Torrini, Marco Vivarelli, and participants at the Schumpeter Society Meetings (Nice, June 2006), the Bank of Italy (Rome, November 2006), Sant'anna School of Advanced Studies (Pisa, February 2007), and at the Vth International Industrial Organization Conference (Savannah, April 2007) for useful comments. B. H. Hall gratefully acknowledges financial support from the Ente Luigi Einaudi. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research or those of the Bank of Italy.
Jacques Mairesse, 2008. "Employment, innovation, and productivity: evidence from Italian microdata," Industrial and Corporate Change, Oxford University Press, vol. 17(4), pages 813-839, August. citation courtesy of