The effect of innovation policy on SMEs’ employment and wages in Argentina
This article evaluates the effect of the Argentinean Support Program for Organizational Change on employment and wages. The program aimed at increasing small and medium-sized enterprises’ competitiveness by co-financing technical assistance to support process and product innovation activities. Although employment is not usually the main objective of these types of programs, they are always implemented assuming that they create—or at least do not destroy—employment opportunities. We use a unique data set with information for the population of firms in Argentina from 1996 to 2008 to test this important assumption. Using a combination of fixed effects and matching, we find that both process and product innovation support increased employment and wages, with a higher impact on employment. In addition, we find that product innovation support had a larger effect on wages than process innovation support.
KeywordsInnovation Employment Wages Policy evaluation SMEs Argentina
JEL classificationsD2 J23 L8 O31 O33 L26
We thank Gustavo Crespi, Lucas Figal, Guido Imbens, Andres Lopez, Ezequiel Tacsir, the editor, two anonymous referees, and participants in the “Mind the Gap 2011” and MEIDE conferences for useful comments. The usual disclaimers apply. This paper is part of the Inter-American Development Bank Project “Employment Generation, Firm Size and Innovation in Latin American: The Microeconomic Evidence.” The views expressed in this paper are those of the authors and do not represent those of the Inter-American Development Bank or the Argentinean Ministry of Labor, Employment, and Social Security.
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