Regions with higher levels of innovation experience stronger employment growth. Doubling patent activity leads to a 6 percent rise in jobs. The effect is even greater in regions that are well-integrated into global knowledge networks and actively engaged in research exchanges. However, when innovation is too concentrated in a few technological fields, employment growth slows.
“Innovation creates more and better jobs than it replaces. However, the benefits aren’t equally shared,” says Farid Toubal, Professor of Economics at the University of Paris Dauphine and co-author of the study Knowledge, Jobs, and Unemployment in Regions. “The strongest gains are in manufacturing and among STEM and highly skilled workers—worsening inequality. From an EU cohesion perspective, it is crucial not only to promote innovation but also to support it through education and redistributive policies.”
The study, conducted as part of the RETHINK-GSC research project led by the Kiel Institute, examines the link between innovation and employment in 272 European regions from 2011 to 2021 using patenting data. It goes beyond simple patent counts by incorporating citation patterns and measures of technological concentration, providing a detailed picture of regional innovation dynamics. Results show that the fastest growing sub-fields are innovation in nanotechnology, electrical machinery, surface technology and digital communication. Yet, the findings also show that while higher innovation quality (measured by forward citations per patent) significantly boosts employment, the strongest job creation happens when innovation is spread across multiple technological fields. Regions where R&D is too concentrated in just a few fields see weaker employment growth, despite overall innovation activity.
The study thus relates to the wider debate around whether or not innovation leads to potential job displacement. This is often debated in public due to concerns about the employment impacts of automation and artificial intelligence (AI). The research shows that innovation increases business productivity and drives labour demand, ultimately supporting employment growth.
“Innovation is crucially important for growth in Europe. But not everyone will gain from it — and education is important. That’s were policy makers need to step in to make sure that people and regions are not left high and dry. Strengthening Europe's competitiveness requires supporting diverse R&D across the continent, addressing structural disparities in peripheral and smaller countries, and deepening integration into global knowledge networks,” says Holger Görg, project leader of RETHINK-GSC and head of the research group ‘International Trade and Investment’ at the Kiel Institute. “Aligning these efforts with education and redistribution policies can help ensure that the benefits of technological progress are shared more equitably — ultimately promoting both European competitiveness and cohesion.”
Read study now: “Knowledge, Jobs, and Unemployment in Regions”
Contacts:
Farid Toubal
Professor of Economics
Université Paris-Dauphine – PSL
farid.toubal@dauphine.psl.eu
Holger Görg
Director International Trade and Investment
Kiel Institute for the World Economy
T +49 431 8814-258
holger.goerg@ifw-kiel.de
Media Contact:
Melanie Radike
Communications Manager
T +49 431 8814-329
melanie.radike@ifw-kiel.de
