Does Innovation by Firms Still Create Jobs even after the Business Stealing Effect at the Sector Level?

ABSTRACT The literature on innovation and employment has not provided theory-consistent results about the question of whether innovation by firms would still create jobs after the canceling out by a negative or business stealing effect and a positive spillover effect at the sector level. This study addresses this issue using Korean firm and sector data over a long-term period. Beyond the consensus results by firm-level analyses, this study also produces the sector-level results confirming the significant and positive long-term effects of product innovation, as well as no significant effects of process innovation, on the net employment growth of a sector.