Technological Innovations and Labor Demand Using Linked Firm-Level Data

Living reference work entry


This chapter illustrates how the relationship between technological innovations and labor demand can be analyzed in a cross-country setting by use of harmonized, multilinked, and microaggregated firm-level data. An investigation of the relationship between new market product (market novelty) sales and labor demand (employment) derived from a two-output cost function is used as an example. The example is embedded in recent literature and discussions on data availability, data limitations, and possible estimation methods. Fixed effects estimations reveal that the sales of market novelties have a significant impact on relative employment in the representative manufacturing firm. In contrast, employment in the representative service firm does not benefit from new market products but rather from the intensity with which information and communication technology innovations are used (in this case the proportion of broadband internet connected employees). The results coincide with those in the firm-level literature, but the approach allows inclusion of a broader variety of firm characteristics, such as firm size, international experience, and ICT intensity.


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Authors and Affiliations

  1. 1.Department of Business and ITUSN School of BusinessNorway
  2. 2.University of IcelandReykjavíkIceland

Section editors and affiliations

  • Marco Vivarelli
    • 1
  1. 1.Department of Economic PolicyUniversità Cattolica del Sacro CuoreMilanoItaly

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