Template-Type: ReDIF-Paper 1.0
Author-Name: Guillermo Arenas Díaz
Author-X-Name-First: Guillermo
Author-X-Name-Last: Arenas Díaz 
Author-Email: guillermo.arenasdiaz@unicatt.it 
Author-Workplace-Name: Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore
Author-Name: Andrés Barge-Gil
Author-X-Name-First: Andrés 
Author-X-Name-Last: Barge-Gil
Author-Email: abarge@ccee.ucm.es
Author-Workplace-Name: Department of Economic Analysis, Complutense University of Madrid, ICAE and GRIPICO, Madrid, Spain
Author-Name: Joost Heijs 
Author-X-Name-First: Joost 
Author-X-Name-Last: Heijs 
Author-Email: joost@ccee.ucm.es 
Author-Workplace-Name: Department of Applied Economics, Structure and History, Complutense University of Madrid, Madrid, Spain 
Author-Name: Alberto Marzucchi 
Author-X-Name-First: Alberto
Author-X-Name-Last: Marzucchi 
Author-Email: alberto.marzucchi@gssi.it 
Author-Workplace-Name: Gran Sasso Science Institute, Social Sciences, L'Aquila, Italia 
Title: The Effect of External Innovation on Firm Employment
Abstract: This paper analyses the effects of product innovations introduced by firms in upstream and downstream sectors and firms in the same sector on firm employment. To this aim, we extend the Harrison et al. (2014) model to analyse the relationship between firm innovation and employment to account for innovation in the same and related sectors. We employ panel data for the innovation activities of Spanish firms together with input–output data. The results show that product innovation by firms in the same sector harms the firm's employment, which is consistent with a business-stealing mechanism. A negative effect on employment is found for the introduction of new products in upstream sectors, which results in the reduction of labour in the focal firm. The type of labour that is displaced by innovations introduced by both same-sector and upstream firms is predominantly low-skilled. No significant effects are found for innovations introduced in downstream industries. 
Length: 34 
Creation-Date: 2022-02
File-URL: http://dipartimenti.unicatt.it/politica-economica-DIPE0026.pdf
File-Format: Application/pdf
File-Function: First version, 2022
Number: dipe0026
Classification-JEL: J23, O31, O33, L6
Keywords: same sector, downstream and upstream sectors, product innovation, employment growth 
Handle: RePEc:ctc:serie5:dipe0026