February 2017

IZA DP No. 10581: Is R&D Good for Employment? Microeconometric Evidence from the EU

published as 'Is Innovation Destroying Jobs? Firm-Level Evidence from the EU' in: Sustainability, 2018, 10(4), 1279

Using a unique firm-level database comprising the top European R&D investors over the period 2002-2013 and running LSDVC estimates, this study finds a significant labour-friendly impact of R&D expenditures. However, this positive employment effect appears limited in magnitude and entirely due to the medium-and high-tech sectors, while no effect can be detected in the low-tech industries. From a policy point of view, this outcome is supporting the EU2020 strategy, but – taking into account that most of European economies are specialized in low-tech activities – is also worrying in terms of future perspectives of the European labour market.