ICC Advance Access originally published online on July 10, 2008
Industrial and Corporate Change 2008 17(4):813-839; doi:10.1093/icc/dtn022
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This article appears in the following Industrial and Corporate Change issue: Special Issue: Schumpeterian Themes on Industrial Evolution, Structural Change and their Microfoundations [View the issue table of contents]
Employment, innovation, and productivity: evidence from Italian microdata
Bronwyn H. Hall, Department of Economics, University of California at Berkeley, Berkeley, California and Maastricht University and UNU-MERIT, Maastricht, The Netherlands. e-mail: bhhall{at}econ.berkeley.edu
Francesca Lotti, Economics Research Department, Bank of Italy. e-mail: francesca.lotti{at}bancaditalia.it
Jacques Mairesse, INSEE, CREST, 15, Boulevard Gabriel PERI, 92245 MALAKOFF CEDEX, FRANCE, and UNU-MERIT, Maastricht, The Netherlands. e-mail: mairesse{at}ensae.fr
Italian manufacturing firms have been losing ground with respect to many of their European competitors. This article presents some empirical evidence on the effects of innovation on employment growth and therefore on firms’ productivity with the goal of understanding the roots of such poor performance. We use firm level data from the last three surveys on Italian manufacturing firms conducted by Mediocredito-Capitalia, which cover the period 1995–2003. Using a slightly modified version of the model proposed by Harrison, Jaumandreu, Mairesse and Peters (Harrison et al., 2005), which separates employment growth rates into those associated with old and new products, we find no evidence of significant employment displacement effects stemming from process innovation. The sources of employment growth during the period are split equally between the net contribution of product innovation and the net contribution from sales growth of old products. However, the contribution of product innovation to employment growth is somewhat lower than in the four European countries considered in Harrison et al. (2005), and the contribution of innovation in general to productivity growth is almost nil in Italy during this period.