The Effect of Innovation on Employment: Evidence from Chilean Firms, mimeo

In this paper we study the impact of innovation activities on employ-ment. We develop an empirical strategy based on Jaumandreu (2003) which accounts for differences between product and process innovations. Using microdata at a firm level for the period 1998-2001, we found that prod-uct innovations affect positively and significantly the employment. On the other hand there is no evidence to suggest that process innovations sig-nificantly affect employment after controlling for investment and sectorial patterns. These findings are of extreme interest in the current discussion about innovation policy in Chile