We investigate employment effects of innovations over the business cycle using data of manufacturing firms from 26 EU countries for the period 1998-2010. Using a structural model, our empirical analysis reveals three important findings: 1) The net effect of product innovation on employment...

The shift of employment from lower to higher productive firms is an important driver for structural change and industry dynamics. We investigate this reallocation in terms of employment gains and losses from innovation. New employment created by product innovation may be offset by employment...