Template-type: ReDIF-Paper 1.0
Author-Name: Waheed, Abdul
Author-Email: waheed@merit.unu.edu
Author-Workplace-Name: UNU-MERIT/MGSoG, Maastricht University
Title: Employment effect of innovation: microdata evidence from Bangladesh and Pakistan
Abstract: The analysis of the impact of innovation on employment growth is an 
	 important topic for policy makers, because (un)employment is an 
	 important social topic, and the effects of innovation on employment are 
	 often poorly understood. Despite the significant importance of this 
	 relationship, very few studies on this topic for developing countries 
	 are yet available compared with developed ones. This paper contributes 
	 to this scanty literature by investigating the employment effect of 
	 innovation for two South Asian developing countries: Bangladesh and 
	 Pakistan. We further analyze whether this relationship shows 
	 country-specific and industry-specific differences. Finally, we 
	 investigate whether complementarity between process and product 
	 innovation exists or which effect (displacement or compensation) of one 
	 particular innovation type dominates the other, in order to influence 
	 employment.  
	 One of the striking findings of our analysis is that both product and 
	 process innovation spur employment in this region as a whole, regardless 
	 of low-tech and high-tech industries, even after controlling for a 
	 number of firm-specific characteristics. Moreover, although both 
	 innovation types also have significantly positive impacts on employment 
	 growth of all Bangladeshi and of all Pakistani firms separately, they 
	 are important factors for employment growth of only high-tech 
	 Bangladeshi firms and of only low-tech Pakistani firms. Moreover, we 
	 observe a strong complementarity between both innovation types in order 
	 to stimulate employment. Contrary to the most previous studies, we 
	 witness an insignificantly negative effect of labour cost on employment 
	 change, perhaps owing to the availability of labour force to hire at 
	 cheaper rates compared with developed countries. We notice that some of 
	 the innovation determinants exert different influences across industries 
	 and across both countries. The same is the case for the determinants of 
	 employment growth.
Classification-JEL: J23, O31, O33
Keywords: Bangladesh, Employment growth, Pakistan, Product innovation, Process innovation 
 Process innovation 
Series: UNU-MERIT Working Papers
Creation-Date: 2012
Number: 2012-024
File-URL: https://unu-merit.nl/publications/wppdf/2012/wp2012-024.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2012024