R&D Spillovers and Employment: A Micro-econometric Analysis

In this paper we analyze the relationship between R&D activity, spillovers and employment at the firm level. A reduced form labour demand equation is estimated. R&D expenditures can account for both product and process innovation. The analysis is based upon a new dataset composed of 879 worldwide R&D-intensive manufacturing firms whose information has been collected for the period 2002-2010. We use data from all EU R&D investment scoreboards editions issued every year until 2011 by the JRC-IPTS (scoreboards). The main contribution to the existing literature is to investigate also the impact of outside R&D activity on own employment level. In particular, the paper investigates the role of R&D spillovers within the pillars of the Triad: United States, Japan and European economic area, but it goes beyond the previous studies by considering more opportune spillover components. Indeed, the potential stock of spillovers is dissociated into four components: the national stock, the international stock, the intra-industry stock and finally the inter-industry one. In this way, we will be able to appreciate to what extent geographical and cultural contiguity matters, by using an updated sample relative to large worldwide firms. The empirical results suggest a significant impact of R&D spillover effects on firms’ employment but the results are quite differentiated according to the spillover stock type and this may represent a relevant source of policy implications.