The Effect of R&D Growth on Employment and Self-Employment in Local Labour Markets

41 Pages Posted: 26 Jan 2018

See all articles by Tommaso Ciarli

Tommaso Ciarli

SPRU, University of Sussex

Alberto Marzucchi

University of Trento - School on Local Development

Edgar Salgado

University of Sussex

Maria Savona

University of Sussex

Date Written: March 23, 2018

Abstract

The paper investigates the effects of firms’ investment in Research and Development (R&D) on employment dynamics in the British local labour markets (Travel to Work Areas). We distinguish between local areas characterised by the initial level of routinised employment of the workforce. We implement a instrumenting strategy to address endogeneity issues in the relation between innovation and employment. Our results suggest that increases in R&D investments mainly affect routinised areas, where the employment created is low skilled, concentrated in non-tradable sectors (like transport, construction) and services. A significant share of the jobs created is self-employment, concentrated in the 25-34 age cohort. We qualify the effect of R&D on self-employment by looking at local firms’ dynamics, which suggest that the increase in self-employment is reflected in a higher number of micro-firms. Rather, in non-routinized areas, R&D results in the expected increase in the demand of high-skilled workers and a reduced demand of low-skill employment.

Keywords: Innovation; R&D investments; Employment; Self-employment; Local Labour Markets; Routinisation; Skills

JEL Classification: O33; J24; D3

Suggested Citation

Ciarli, Tommaso and Marzucchi, Alberto and Salgado, Edgar and Savona, Maria, The Effect of R&D Growth on Employment and Self-Employment in Local Labour Markets (March 23, 2018). SWPS 2018-08. Available at SSRN: https://ssrn.com/abstract=3147861 or http://dx.doi.org/10.2139/ssrn.3147861

Tommaso Ciarli (Contact Author)

SPRU, University of Sussex ( email )

Jubilee Building
University of Sussex
Falmer, Brighton, Sussex BN1 9SL
United Kingdom

Alberto Marzucchi

University of Trento - School on Local Development ( email )

Via Belenzani, 39
Trento, Trento 38122
Italy

Edgar Salgado

University of Sussex

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

Maria Savona

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

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