Do young innovative companies create more jobs? Evidence from Pakistani textile firms
Waqar Wadho, Micheline Goedhuys & Azam Chaudhry
#2019-002
Using unique innovation survey data collected among a homogenous sample
of firms active in the textiles and apparel sector in Pakistan, this
paper analyses the role of innovation for employment growth. In
particular, it develops and tests the hypothesis that innovation is
conducive to employment creation, and that this is especially the case
for smaller and younger firms, supporting the hypothesis that young
innovative companies grow faster by engaging in riskier and more radical
innovation to catch up with incumbent firms. We find empirical evidence
for these hypotheses, which is robust to different model specifications
and estimation techniques and to different measures of innovation. Young
innovative companies also perform well in absolute employment creation
making them interesting from a policy perspective.
Keywords: Technological innovation, Firm growth, Employment growth,
Quantile regression Textiles, Pakistan
JEL Classification: L25, L26, L67, O30, O53