Technological Innovation and Employment Reallocation

Overview & Synopsis

The paper describes the dynamics of employment at a firm and sector level in the French industry and examines how far technological innovation can give account of it. We use a firm sample of 15,186 firms, over the 1986-1990 period. The two facts we want to explain at a firm level and a sector level are the net change in employment and the micro turmoil (transfers between competing firms). Innovating firms and sectors create jobs more than others over medium run (5 years). Process innovation is more job creating than product innovation at the firm level, but the converse is true at the sector level. This puzzle is probably be due to substitution effects (creative destruction).