Innovation and Employment: Old Debate - New Insights from CIS 3

Using the model recently developed by Jaumandreu (2003) this paper reports new results on the relationship between innovation and employment growth for Germany. The model is taylor-made for analysing firm-level employment effects of innovations using specific information provided by CIS data. It establishes a theoretical link between employment growth and innovation output. The econometric analysis confirms that product innovations have a positive employment impact. In contrast to previous studies, this effect is independent of the novelty degree. Moreover, different employment effects between manufacturing and service firms regarding process innovations were found. Finally, in a cross country perspective the results for Germany are very similar to those found for Spain and the UK.