[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ifs/ifsewp/95-06.html
   My bibliography  Save this paper

Job creation, technological innovation and adjustment costs

Author

Listed:
  • Costas Meghir

    (Institute for Fiscal Studies and Yale University)

  • Annette Ryan

    (Institute for Fiscal Studies)

  • John Van Reenen

    (Institute for Fiscal Studies)

Abstract
This paper compares the employment behaviour of innovative firms with those that are less technologically advanced. Innovation (by a company or its rivals) can affect job creation along many dimensions. Usually it is assumed that output will increase due to firms capturing higher market shares and that the factor mix may change if technology is non-neutral. We focus on a neglected argument - that innovation will affect the employment adjustment costs firm face. Using a panel dataset of 600 large British manufacturing firms we implement a symmetrically normalised method of moments estimator which is invariant to any normalisation rule. The parameter estimates from the Euler equation suggests that firms with a higher stock of innovations face lower adjustment costs of employment than less technologically progressive firms. This finding is consistent with the observation that innovative firms in our dataset have higher variance of employment over time - lower adjustment costs allow them to move more quickly to equilibrium levels of employment. It is also consistent with other studies which find that innovative firms are better able to protect profit margins during adverse demand shocks and that they have faster net employment growth.

Suggested Citation

  • Costas Meghir & Annette Ryan & John Van Reenen, 1995. "Job creation, technological innovation and adjustment costs," IFS Working Papers W95/06, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:95/06
    as

    Download full text from publisher

    File URL: http://www.ifs.org.uk
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. César Alonso-Borrego & Dolores Collado, 2002. "Innovation and Job Creation and Destruction . Evidence from Spain," Recherches économiques de Louvain, De Boeck Université, vol. 68(1), pages 148-168.
    2. Bernhard Dachs & Martin Hud & Christian Köhler & Bettina Peters, 2016. "Employment Effects of Innovations over the Business Cycle: Firm-Level Evidence from European Countries," DEM Discussion Paper Series 16-20, Department of Economics at the University of Luxembourg.
    3. Allan Kearns & Frances Ruane, 1997. ""To R&D or not to R&D, that is the Question": A Firm Level Study of Employment Growth in the Irish Manufacturing Sector, 1986-95," Economics Policy Papers 975, Trinity College Dublin, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ifs:ifsewp:95/06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emma Hyman (email available below). General contact details of provider: https://edirc.repec.org/data/ifsssuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.