Abstract
This study based on the firm level data for eleven industries for the period ranging from 1998 through 2010 makes an attempt to capture the effect of R&D on employment in the backdrop of the debate on possible tradeoffs between innovation and labour absorption. It also estimates the firm specific time variant total factor productivity growth and technical efficiency and assesses the impact of R&D on these performance indicators. Though the findings are not supportive of a positive relationship between R&D and productivity, the elasticity of employment with respect to R&D is seen to be positive in a number of industries. Even when R&D does not mean actual innovation of technology, it involves processing of byproducts and efforts pursued to bring in an improvement in product quality and efficiency which may be resulting in employment gains.
Article Note
The financial support received under the IDRC-TTI grant to pursue this research is gratefully acknowledged.
This chapter was earlier published as “Innovation and employment: a firm level study of Indian industries” in the Eurasian Business Review, Vol. 5, No. 1, 2015 and is reproduced here with permission.
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Notes
- 1.
However, when output is fixed, the shift in technology from being capital intensive to labour intensive would result in deterioration in labour productivity.
- 2.
- 3.
Vivarelli (2011) argues that innovation has a strong skill-bias.
- 4.
The number of firms is as follows: Consumer Durables (Domestic Appliances): 15, Consumer Durables (Electronics): 12, Chemical: 119, Electric Equipment: 51, Electronics Component: 36, Engineering: 79, Engineering Construction: 46, Engineering (Industrial Equipments): 38, Household and Personal Products: 23, Leather: 18, Pharmaceuticals and Drugs: 158.
- 5.
As for example, Whirlpool of India Ltd. registered a R&D growth of 28.41 %.
- 6.
This procedure assumes that each firm in a given industry is paying the same wage rate which may not be the case in reality.
- 7.
Though it is an omitted variable model it clearly indicates the lack of a relationship. If the impact were significant then there was a reason to consider other variables before highlighting the result.
- 8.
If the rise in output is more than employment then labour per unit of output may decline in spite of an increase in overall employment.
- 9.
Results not reported.
- 10.
Results not shown.
- 11.
Results not reported.
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Mitra, A., Jha, A.K. (2016). Innovation and Employment: A Firm Level Study of Indian Industries. In: Siddharthan, N., Narayanan, K. (eds) Technology. India Studies in Business and Economics. Springer, Singapore. https://doi.org/10.1007/978-981-10-1684-4_7
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