R&D Spillovers and Employment: Evidence from European Patent Data

In this paper we investigate the patents role in 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). Since the innovation output of industrial strategy of every firm is the number of patents, the main contribution to the existing literature is to investigate also the impact of patents/R&D ratio and patents/Spillovers ratio on own employment level. 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.