Innovation and its Effects on Employment Composition: Microeconomic Evidence from Colombian Firms

Abstract

This study analyses the effects of innovation on employment in Colombian firms for the manufacturing and service sectors in two different periods: 2007-2010 for the manufacturing industry, and 2010-2011 for the service industry. Based on the theoretical framework proposed by Harrison et al.(2014), we test this relationship using instrumental variables techniques. Data proceed from The Annual Manufacturing Survey, The Development and Technological Innovation Industrial Survey, and The Development and Technological Innovation Services Survey, all of them collected by the Colombian National Administrative Department of Statistics (DANE).Our empirical results show that sales growth due to new products positively affects employment growth, and process innovation has not a displacement effect on employment growth. This is robust to different specifications and the inclusion of control variables.