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Journal of Evolutionary Economics

, Volume 21, Issue 2, pp 255–283 | Cite as

The firm-level employment effects of innovations in high-tech US manufacturing industries

  • Alex CoadEmail author
  • Rekha Rao
Regular Article

Abstract

We focus on four two-digit manufacturing industries that are known for their high patenting activity. We then use Principal Components Analysis to generate a firm- and year-specific ‘innovativeness’ index by extracting the common variance in a firm’s patenting and R&D expenditure histories. To begin with, we explore the heterogeneity of firms by using semi-parametric quantile regression. We then move on to parametric regressions that include a weighted least squares (WLS) analysis, which explicitly takes into account the different job-creating potential of firms of different sizes. As a result, we investigate the effect of innovation on total number of jobs, whereas previous studies have focused on the effect of innovation on firm behavior. Indeed, previous studies have typically taken the firm as the unit of analysis, implicitly weighting each firm equally according to the principle of ‘one firm equals one observation’. Our results suggest that firm-level innovative activity leads to employment creation that may have been underestimated in previous studies.

Keywords

Technological unemployment Innovation Firm growth Weighted least squares Quantile regression 

JEL Classification

L25 O33 J01 

Notes

Acknowledgements

An earlier draft of this paper won the ‘Young Scholar Best Paper Award’ at the DRUID summer conference 2007. We thank Hans Gersbach, Karin Hoisl, Camilla Lenzi, Pierre Mohnen, Christian Seiser, and Ulrich Witt, as well as participants at the DRUID summer conference 2007 and the Monte Verità conference on “The Economics of Technology Policy” (July 2007), and two anonymous referees for helpful comments and discussions. The usual caveat applies.

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Copyright information

© Springer-Verlag 2010

Authors and Affiliations

  1. 1.SPRUUniversity of SussexBrightonUK
  2. 2.Evolutionary Economics GroupMax Planck Institute of EconomicsJenaGermany
  3. 3.Centre d’Economie de la Sorbonne, Equipe MATISSEUniv. Paris 1—CNRSParisFrance
  4. 4.LEMSant’Anna School of Advanced StudiesPisaItaly
  5. 5.School of ManagementUniversity of BathBathUK

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