Innovation, Firm Size, Technology Intensity, and Employment Generation: Evidence from the Uruguayan Manufacturing Sector

Abstract

In this article, we investigate the effect of product and process innovation on employment growth and on employment composition in terms of skills using data from Uruguayan manufacturing firms' innovation surveys. The results reveal that product innovation is associated with employment growth. There is (weaker) evidence that process innovation displaces labor, especially in high-tech firms. There is evidence that innovation is more complementary to skilled than to unskilled labor. Product innovation seems to have a larger positive effect on skilled labor, especially in high-tech industries. Process innovation in general displaces unskilled labor but is neutral in terms of skilled labor.

Innovation and employment growth: evidence from manufacturing firms in Africa

“…Relatedly, Benavente and Lauterbach (2008) in a study of firms in Chile show that employment growth is positively associated with product innovation although neutral to process innovation. Similarly, Aboal et al (2015) in a study of Uruguayan manufacturing firms shows that product innovation enhances employment growth; however, process innovation reduces employment growth among unskilled labour although its neutral for skilled labour. However, with regard to studies relating employment growth and innovation in Africa, these are rather scarce.…”

“…For example, Elejalde et al (2015) and Benavente and Lauterbach (2008) argue that employment growth is not associated with process innovation. Aboal et al (2015) further argue that employment growth is only inversely related to process innovation among unskilled labour workers although the relationship is neutral among skilled workers. On the contrary, Cirera and Sabetti (2016) show that employment growth is directly related with process innovation.…”

“…While the related literature from developing countries is scanty, even then there is consensus that employment growth is positively associated with product innovation in Latin America (Elejalde et al 2015;Aboal et al 2015;Benavente and Lauterbach 2008). However, the relationship between employment growth and process innovation is equally inconclusive.…”

Acronyms and abbreviations

“…Commodities make up a high share of Chile's exportsShare of gross exports by technology content towards selected regions, Chile and selected countries, 2016 LAC: All Latin American and Caribbean countries. The technological classification followsLall, S. (2000) andAboal et al (2015). Source: Authors' analysis based on UN (2017), Comtrade Database, https://comtrade.un.org.…”

Essays in industrial organization

“…The available evidence comes from Benavente and Lauterbach (2008)), who estimate the Harrison, Jaumandreu, Mairesse, and Peters (2014) model for Chile. Contemporaneous to our article, Aboal, Garda, Lanzilotta, and Perera (2015), Alvarez, Benavente, Campusano, and Cuevas (2011), and Monge-Gonzalez, Rodriguez-Álvarez, Hewitt, Orozco, and Ruiz (2011) estimate Harrison, Jaumandreu, Mairesse, and Peters (2014) 's model for Chile, Costa Rica, and Uruguay, and Crespi and Tacsir (2013) present a comparative analysis for the several countries. They find that while product innovations increase employment, process innovations do not affect it.…”