Technological Interdependencies and Employment Changes in European Industries

This work addresses the role of inter-sectoral innovation flows, which we frame as technological interdependencies , in determining sectoral employment dynamics. This purpose is achieved through the construction of an indicator capturing the amount of R&D expenditures embodied in the backward linkages of industries. We refer to the literature on innovation-employment nexus, inter-sectoral knowledge spillovers and Global Value Chains. The relevance of this vertical technological dimension for determining employment dynamics is tested on a panel data of European industries over the 2008-2014 period. Results show a statistically significant and negative employment impact of the degree of vertical integration in terms of acquisitions of R&D embodied inputs. Combining the role of demand, the double nature of innovation - as product and as process -, together with inter-sectoral linkages, this work shows that the dependence of a sector from innovation performed by other ones exert a negative effect upon employment