The effects of innovation on the quantity and quality of jobs: evidence from sub-Saharan Africa

ABSTRACT

Technological innovation is widely considered a primary source of economic growth and policies to encourage firm-level innovation remain key, even though its impact on employment remains indeterminate. Using the World Bank Enterprise survey on a sample of enterprises across sub-Saharan Africa, specifically Ghana, Kenya and Zambia, this study investigates: first, the effect of innovation on employment; second, the relationship between innovation and quality of employment and lastly, whether the type of innovation is important in isolating the effect of innovation on employment in sub-Saharan Africa. The results indicate that innovation has employment-enhancing effects in the subregion. In addition, novelty in product innovation is a more important source of employment for the firms in sub-Saharan Africa. In terms of innovation and the quality of employment, this study finds that process innovation is associated with a change in the labour composition mix in favour of unskilled workers.

KEYWORDS:

• Process innovation
• product innovation
• employment
• manufacturing
• service

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 International Monetary Fund. April 2018. ‘World Economic Outlook Database’. Available at https://www.imf.org/external/pubs/ft/weo/2018/01/weodata/index.aspx

2 World Poverty Clock. June 2018. World Data Lab. Available at: http://worldpoverty.io/.

3 The World Bank enterprise survey data offers limited options for measuring employment composition (quality).

4 In the country specific estimates in Table A4 shown in the Appendix, the results appear to be driven by Ghanaian and Zambian firms.

5 In the country-specific estimates presented in Table A5 in the Appendix, product innovation is positive and significant only for Zambian firms, albeit at 10 percent significance level.

6 The Innovation sections of the World Bank’s Enterprise Survey Data questionnaire had sections for the number of skilled and unskilled production workers administered only to firms in the manufacturing sector.