Innovation and job creation: a sustainable relation?

This study compared the employment growth patterns of innovative and non-innovative firms, focusing on whether or not there are systematic differences between these two categories in the persistence of the jobs they create. To this end, a unique longitudinal dataset of 3304 Spanish firms over the period 2002-2009 and a semi-parametric quantile regression approach was used. The empirical results indicate that, ceteris paribus, innovative, smaller and younger firms are more likely to experience high employment growth episodes than non-innovative firms. More interestingly, among those firms that contribute more to yearly job creation (e.g. high-growth firms), only innovative companies are able to sustain high growth over time (in contrast to non-innovative firms). In addition, among declining firms, non-innovators tend to deteriorate faster in terms of economic performance than innovators.