Innovation, Employment and Inequality

Dr. Tommaso Ciarli, UNU-MERIT

In the first half, we provide a comprehensive account of the local employment impact of firms’ investment in R&D in UK local labour markets. We focus on the composition effects across industries and employment types. We distinguish the impact of R&D across areas with different initial shares of workers in routinised occupations and industry shares. Drawing on two instrumenting strategies, our results consistently suggest that R&D change, on average, exerts a small negative effect on local employment, mainly through changes in its composition. Results differ significantly for local labour markets with different initial shares of workers in routinised occupations. Areas with below median shares of workers in routinised occupations experience a relative reduction in low educated employment in non tradeable services and self-employment. In areas with above median shares of workers in routinised occupations, low education employment also increase, in tandem with an increase in non tradeable services; all the positive employment change occurs in self-employment. We qualify the positive effect of R&D on self-employment in highly routinised areas and find no evidence to distinguish if it is driven by opportunities related to R&D investment or necessity.
In the second half, we estimate wage premium from firm R&D investment, and the between and within firm heterogeneity of the innovation rent-sharing. We analyse the distribution of innovation wage premia across individuals, as depending on workers’ characteristics, including the degree of routinisation and the level of remuneration of occupations, wage distribution and gender. Using matched employer-employee data on the manufacturing sector in the UK over 2009-2015, and a robust import competition instrument, we find a hourly wage elasticity of R&D expenditure that ranges between 0.24 to 0.41. Workers in less routinised and better paid occupations benefit from larger gains, while workers in highly routinised occupations gain less. We also find that, irrespectively of the position in the organisation and the occupational category, men gain twice as much as women from innovation premia. The results suggest that innovation does offer specific wage gains, but that R&D might further increase wage inequality and contribute to the gender pay gap. We offer support to the argument that innovation policy should be complemented by actions to mitigate its potential exclusionary effects.

About the speaker

Tommaso Ciarli main research interests are in the area of technological change, institutional change, and economic development. He has lead and co-lead several funded projects on: modelling economic growth and structural change (EC, British Academy, ESRC); modelling sustainable transitions (Rebuilding Macroeconomics); mapping the relation between science, technology and innovation trajectories, sustainable development and societal challenges (UKRI/GCRF, DFID, ESRC and NSF); estimating the impact of innovation on employment and inequality (ESRC, JRF, GLA, EC); studying the relation between inclusive innovation and structural change (IDRC); estimating the impact of violent conflict on economic activity (ESRC, CEPR and DFID). 

Beyond revising papers on the above proejcts, Tommaso is currently working on several funded projects on: Steering Research and Innovation for the Global Goals, STRINGS (GCRF/ESRC); Assessment of Science, Technology and Innovation Metrics in Africa (FCDO); Pathways to Inclusive Labour Markets, PILLARS (EC); Study on factors impeding the productivity of research and the prospects for open science (EC); Strengthening the Capacity of Africa’s Science Granting Councils in the Use of Evidence in Policy and Decision Making (IDRC).

He has served as advisor for governments (e.g. BEIS) and international organisations (e.g. ECLAC, UNIDO, UNDP, IDB). 

He holds a PhD in Economics and Industrial Development from the University of Birmingham (UK) and the University of Ferrara (Italy), a Master in Development Economics (Sussex) and a degree in Quantitative Economics and Social Sciences (Bocconi). Before his PhD, Tommaso has worked for UNIDO and ECLAC. 

Venue: via Zoom (please contact us at for the Zoom link)

Date: 28 January 2021

Time: 12:00 - 13:00