What types of public R&D support increase employment performance? Evidence from Korean firm-level data

ABSTRACT

If employment is the result of a series of decisions based on a firm’s performance at its growth phase, then an increase in firm employment should be the result of labor demand or optimal choices made in this process. The study aims to investigate the effects of the various forms of public support on employment decisions within a firm’s innovation process. For empirical analysis, an ordered logit model and a hurdle model were employed on a sample of 3,300 Korean firms. While non-financial support had a statistically significant positive effect on employment performance in both models, the results were mixed on other forms of policy support. Overall, the results of the empirical analysis clearly indicate that firms’ behavior can be better understood by approaching employment in a two-step decision-making process such as the hurdle model.

KEYWORDS:

• Public R&D support
• innovation investments
• employment performance
• ordered logit model
• hurdle model

JEL CLASSIFICATION:

• O32
• M21
• H25

Disclosure statement

No potential conflict of interest was reported by the authors.