Abstract
This study investigates the impact of new market product (market novelty) sales on labor demand (employment). Based on a two-output cost function (market novelties and existing products) a relative employment equation is derived with the ratio of labor to material inputs as dependent variables. The relative labor demand model is estimated using biennial data for 25 industries, nine European countries and five time periods (2002–2010) or by use of a size-class dataset with broad industry groups. System GMM estimations accounting for endogeneity show that the turnover (sales) of market novelties (in relation to existing products) has a significant impact on relative employment in manufacturing industries. On average, an increase in the relative turnover of new market products by one percentage point is associated with a 1.6% increase in the employment ratio. In contrast, employment in service industries does not benefit from new market products but instead from the intensity with which information and communication technology innovations are used, approximated by the proportion of broadband internet connected employees. When instead the size-class dataset is employed, it becomes clear that market novelties primarily drive employment in small firms.
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Notes
The GMM estimations are carried out using the XTABOND2 command in STATA 14.
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Acknowledgments
We would like to thank Eric Bartelsman, Randolph Bruno, Bertrand Koebel, Anna Sabadash, Willi Semmler and the participants of the IPTS-ESSLait workshop (March 2014) in Seville, the Conference of European Statistics Stakeholders (November 2014) in Rome, the Austrian Economic Association (NOEG) (June 2015), the WCCE in Rome (June 2015) and the Schumpeter conference in Montreal (July 2016) for helpful comments on earlier versions of the article. This work was initiated within the collaboration between WIFO and the ESSLait project (Eurostat Grant Agreement Number 50721.2013.001-2013.082). The authors would also like to thank the Austrian National Bank for financial support (Grant Number 16524).
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Falk, M., Hagsten, E. Employment impacts of market novelty sales: evidence for nine European Countries. Eurasian Bus Rev 8, 119–137 (2018). https://doi.org/10.1007/s40821-017-0098-0
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DOI: https://doi.org/10.1007/s40821-017-0098-0