Fact of the Week: In the EU, Increasing R&D Investment Creates 30 Percent More Employment in High-Tech Firms than Medium-Tech Firms

June 12, 2017

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R&D investments have larger effects on employment for advanced industries than other industries. When firms invest in R&D, they generate employment opportunities for scientists and engineers, plus the support staff tied to research jobs, such as human resource personnel, lab technicians, and others. Furthermore, it is often the most R&D-intensive firms that are best positioned to translate R&D investments into employment growth.

A discussion paper from the Institute of Labor Economics in Bonn, Germany, shows the comparative R&D employment returns (jobs created when firms increase R&D investment by one percent) between high-tech, medium-tech, and low-tech firms across the European Union. The paper finds that high-tech firms create 30 percent more jobs than medium-tech firms for the same percentage increase in R&D investment.