Employment Generation, Firm Size and Innovation: Microeconometric Evidence from Argentina

This paper provides evidence about the relationship between innovation and employment in Argentina. In particular, it quantifies the impact of different types of innovations (process or product innovations) on employment growth and skill composition (skilled-unskilled labor) and the impact of different innovation strategies (buy or make) on employment growth, and analyzes whether these impacts depend on firm size or technology intensity. To answer these questions a model proposed in Harrison, Jaumandreu, Mairesse, and Peters (2008) was estimated using an IV approach with data from the Innovation Surveys for Argentina for the period 1998-2001. The results suggest that product innovations have a positive impact on employment growth while process innovations have no significant impact on employment growth. In addition, there is some evidence that product innovations are skill-biased, and that a mixed innovative strategy of make and buy has a larger impact on employment growth than a buy-only strategy. Finally, similar impacts for small firms but differential impacts for low-tech and high-tech sectors were found.