Environmental Innovation and Employment Dynamics in Different Technology Fields - An Analysis Based on the German Community Innovation Survey 2009

In a controversial political debate, new environmental technologies are often regarded as a job creator or – due to strict environmental policy – as a job killer. A detailed analysis for these employment effects for different environmental innovation fields might shed light on this debate but, unfortunately, there are only few corresponding studies available. We use the 2009 wave of the German part of the Community Innovation Panel (CIS) allowing for such an analysis at the firm level. The main focus of the paper lies on the analysis of the adaptation behaviour of firms with respect to the relationship of employment and (environmental) innovation. Our econometric analysis shows, that innovative firms in general are characterised by a significantly more dynamic employment development. Especially the realisation of environmental process innovations leads to a higher employment within the firm. The theoretical background of this finding is, that cost savings induced by process innovations lead to an improved competitiveness of the firm. This has a positive effect on demand and thus increases also employment.

A more detailed analysis by different environmental innovation fields shows that material and energy savings are positively correlated to employment because especially these process integrated measures help to increase the profitability and competitiveness of the firm. On the other side, air and water process innovations that are still dominated by end-of-pipe technologies, however, have a negative effect on employment.

In a nutshell, the employment effects of the introduction of cleaner process technologies seem to be more advantageous within a firm compared to more end-of-pipe oriented technologies.

Horbach, Jens and Klaus Rennings (2012), Environmental Innovation and Employment Dynamics in Different Technology Fields - An Analysis Based on the German Community Innovation Survey 2009, ZEW Discussion Paper No. 12-006, Mannheim.