The role of sectoral patterns of innovation in labour markets, capital markets, and economic growth

The main theme of the four essays making up this final thesis, is the role played by sectoral patterns of innovation in the relationships that characterise different fields of the economic analysis. Sectoral dimension strongly influences the nature of knowledge-base, the mode with which it accumulates and supports organisation of innovation activities. For that reason the links between innovation and, respectively, labour market, market for corporate control and economic growth, show a complex picture when different sectors of economic activities are taken into account. The first part of the thesis consists of two essays concerning Italian regions, while the second part deals with European Union countries. More precisely the contents are organised as follows: 1. Innovation And Labour Market In Italy: An Analysis Concerning The Sectoral And Territorial Dimensions In this paper the link between labour market flexibility and innovation is analysed paying attention to the different technological regimes of economic activities and the different geographical areas of the Italian economy. A dynamic panel data specification is used to assess the endogenous relationship between patents, included as a proxy of the innovation, and job turnover and wages which represent labour market indicators. The results show that higher job turnover only has a significant and negative impact on patent activities in regional sectors of Northern Italy, while a positive and significant impact of blue and white collar wages has been generally found. 2. Human Capital And Economic Growth Over Different Sectoral Patterns: The Case Of The Italian Regions This paper analyses efficiency and productivity growth of Italian regions from 1971 to 2003, by means of a nonparametric programming method (Data Envelopment Analysis). In the first part, the whole economy of the regions is taken into account and the role played by human capital is detected both for efficiency calculation (DEA analysis) and to compute the Malmquist productivity index. The second part focuses upon six manufacturing sectors, where in addition to capital and labour, also patents and a proxy of external economies are used to analyse total factor productivity growth. 3. Labour Protection And Total Factor Productivity Growth: A Sector And Country Comparison In The EU The present study examines cross-national and sectoral differences in total factor productivity growth in sixteen European countries from 1995 to 2005. The main aim is to ascertain the role of flexible employment contracts and collective labour relationships in explaining the ample differentials recorded in the European economy. The EU KLEMS database is used for growth accounting in addition to a broad set of indicators of labour regulations, covering two distinct ‘areas’ of labour regulation: employment laws and collective relations laws. By means of this comprehensive approach one considers arrangements that regulate allocation of labour inputs (fixed-term, part-time contracts, hours worked) and of payoff and decision rights of employees. The main findings show that, since 1995, European countries have not followed similar patterns of growth. A large number of variations between European economies are caused by deep differentials in total factor productivity and part of this heterogeneity is caused by sectoral diversities. In addition, in labour-intensive sectors such as services, fixed-term contracts, which imply shorterterm jobs and lower employment tenures, may discourage investment in skills and have detrimental effects on total factor productivity increases. Lastly, some forms of labour regulation and arrangements that give a ‘voice’ to employees mitigate these perverse effects on efficiency patterns. 4. The Market For Corporate Control And Technological Regimes In The Last European Merger Wave Comparisons by countries and by sectors of mergers and acquisitions have usually been performed in separate fields of research. A first group of studies, focusing on international comparisons, has explored the role of corporate governance systems, investor protection laws and other countries’ regulatory institutions as the main determinants of takeovers around the world. A second group of contributions has attributed a central role to variations in industry composition, documenting that, in each country, mergers occur in waves and within each wave clustering by industry is observed. This paper aims to integrate both perspectives and to make comparisons by countries and by sectors, thus exploring the role of various driving forces on takeover activities. It also intends to consider the specific influence that technological regimes and their innovation patterns may exert in reallocating assets and moving capital among sectors. This will be done by examining the European experience of the last few years (2002-2005). We found that even in countries where transfer of control is a frequent phenomenon, mergers are less frequent in those sectors where innovation is a cumulative process and where takeovers may be a threat to the continuity of accumulation of innovative capabilities.