The impact of technological and organizational innovations on employment in European firms

By using firm-level data provided by the fourth Community innovation Survey (CIS4)—for a selected number of EU countries—this article explores the employment impact of innovation extending the analysis to organizational change. The empirical evidence presented shows that both technological and organizational innovation exert a positive impact on employment mainly “indirectly,” that is by improving growth performances in firms. The strength of these indirect effects have been found to vary across different types of innovations. Despite the limits imposed by data at our disposal, the evidence presented seems to somewhat diminish the relevance of the labor displacing effects of the process innovation, the latter being strong and clearly visible only within the manufacturing industry and only when process innovations are combined with organizational changes.