Effects of innovation on employment in Latin America

Abstract This study examines the impact of process and product innovation on employment growth and composition in Argentina, Chile, Costa Rica, and Uruguay using micro data from innovation surveys. Employment growth is related to process innovations and to the growth of sales separately due to innovative and unchanged products. Results show that compensation effects are pervasive and that the introduction of new products is associated with employment growth at the firm level. No evidence of displacement effects due to the introduction of process innovations was observed. With respect to the impact of innovation on employment composition, there is scant evidence of a skill bias, although the product innovation is more complementary to skilled than to unskilled labor.