Does R&D investment drive employment growth? Empirical evidence at industry level from Japan

Imran Hussain Shah, Konstantinos Kollydas, Pak Yee Lee, Issam Malki, Crystal Chu

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)
124 Downloads (Pure)

Abstract

Strong demographic headwinds have motivated Japan to strengthen its economy by fostering innovation. This paper draws on a panel of business enterprises operating in 33 industries in Japan to examine how research and development (R&D) activities affect employment. Our findings suggest that employment gains are associated with innovation, both at the aggregate level and within groups of major industries. The positive impact of technological advancement is more pronounced in the manufacturing sector. The results reveal heterogeneous patterns of the key determinants of employment growth based on the level of industries' routine intensity, but they accord well with the compensation theory concerning the connection between innovation and job creation. These results will be of interest for policymakers to design targeted economic strategies by supporting technological development in Japan and could also serve as a compass for other countries with similar workforce structures and macroeconomic characteristics.

Original languageEnglish
Pages (from-to)102-118
Number of pages17
JournalInternational Journal of Finance & Economics
Volume29
Issue number1
Early online date12 Jul 2022
DOIs
Publication statusPublished - Jan 2024

Bibliographical note

© 2022 The Authors. International Journal of Finance & Economics published by John Wiley & Sons Ltd.

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

Keywords

  • employment
  • industry‐level analysis
  • innovation
  • manufacturing
  • R&D expenditure
  • routine intensity

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