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Innovations, prices, and employment: A theoretical model and an empirical application for West-German manufacturing firms

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  • Smolny, Wernerr
Abstract
In this paper, a theoretical model of the impact of product and process innovations on output, capacity utilization, employment, and prices is developed. The model is estimated with micro-data for West German manufacturing firms from the ifo firm panel. The empirical results reveal that innovative firms exhibit a higher utilization and more output and employment growth than noninnovative firms. Innovations also change the market structure. The frequency of price and output changes is lower and the frequency of employment changes is higher in sectors with a large share of product innovators, and vice versa in sectors with a large share of process innovators.

Suggested Citation

  • Smolny, Wernerr, 1996. "Innovations, prices, and employment: A theoretical model and an empirical application for West-German manufacturing firms," Discussion Papers 37, University of Konstanz, Center for International Labor Economics (CILE).
    • Handle: RePEc:zbw:koncil:37
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    More about this item

    Keywords

    Innovations; price setting; market structure;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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