Show Less

Innovation and Employment

Process versus Product Innovation

Charles Edquist, Leif Hommen and Maureen McKelvey

Which kinds of growth lead to increased employment and which do not? This is one of the questions that this important volume attempts to answer. The book explores the complex relationships between innovation, growth and employment that are vital for both research into, and policy for, the creation of jobs.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 4: Product Innovations and Employment

Charles Edquist, Leif Hommen and Maureen McKelvey


A product innovation occurs when something new is produced (and sold), either for the first time ever or for the first time in a firm, or in a country or region.1 This means that new economic activities are established, or existing activities change direction. Thereby product innovations involve changes in the structure of production. This may also include new investments in buildings and machinery, and/or using existing resources for new purposes. The immediate impact on employment may be positive if new areas are developed, or the immediate impact on employment may be neutral if labour is transferred from one area to another. Despite their apparent importance for economic and industrial dynamics, product innovations are a neglected issue in mainstream economic theory, as is also true for the analysis of their impact on employment. In large part, this is due to the fact that product innovations are usually dealt with as ‘one compensation mechanism among others’ in respect of process innovations, rather than being addressed separately, as a special kind of determinant of employment. For example, this ‘compensation’ approach is followed by Vivarelli (1995), who provides a comprehensive review of theories of compensation and compensation mechanisms. It should be noted, however, that Vivarelli’s own argument is that product innovation, as opposed to other compensation mechanisms, is an especially powerful factor in the reduction of technological unemployment caused by process innovation (ibid.: 169). Vivarelli’s reasoning is highly consistent with that of Pasinetti (1981), who developed a theoretical model demonstrating the existence of...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.