Abstract
This study based on the firm level data for eleven industries for the period ranging from 1998 through 2010 makes an attempt to capture the effect of R&D on employment in the backdrop of the debate on possible tradeoffs between innovation and labour absorption. It also estimates the firm specific time variant total factor productivity growth and technical efficiency and assesses the impact of R&D on these performance indicators. Though the findings are not supportive of a positive relationship between R&D and productivity, the elasticity of employment with respect to R&D is seen to be positive in a number of industries. Even when R&D does not mean actual innovation of technology, it involves processing of byproducts and efforts pursued to bring in an improvement in product quality and efficiency which may be resulting in employment gains. This finding has important policy implications reinforcing the importance of incentives for pursuing R&D on a larger scale.
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Notes
Different mechanisms of technological change and effects on jobs emerge in the work of Bogliacino and Pianta (2010).
However, when output is fixed, the shift in technology from being capital intensive to labour intensive would result in deterioration in labour productivity.
Vivarelli (2011) argues that innovation has a strong skill-bias.
For example, Whirlpool Of India Ltd. registered a R&D growth of 28.41 %.
This procedure assumes that each firm in a given industry is paying the same wage rate which may not be the case in reality.
Also information on some of the variables which are relevant from the point of view of the firm is not available Though this is an omitted variable model it clearly indicates the lack of a relationship. If the impact were significant then there was a reason to consider other variables before highlighting the result.
Wages are not considered because capital asset is included as a determinant. Since capital itself is a function of wage rental ratio multicollinearity and the problem of double counting would have emerged had we included wage rate in the function.
If the rise in output is more than employment then labour per unit of output may decline in spite of an increase in overall employment.
Results not reported.
Results not shown.
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Acknowledgments
The authors would like to express their sincerest gratitude to the anonymous referees and Professor Marco Vivarelli for their constructive comments and suggestions.
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The financial support received under the IDRC-TTI grant to pursue this research is gratefully acknowledged.
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Mitra, A., Jha, A.K. Innovation and employment: a firm level study of Indian industries. Eurasian Bus Rev 5, 45–71 (2015). https://doi.org/10.1007/s40821-015-0015-3
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DOI: https://doi.org/10.1007/s40821-015-0015-3