The Impact of Multinational R&D Spending Firms on Job Polarization and Mobility

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(CC) YanniKouts/FlickrThis report analyses the role of multinational R&D intensive firms in job polarization. It also investigates how these firms affect the labour market in terms of wage growth and labour mobility. Firms appearing on the EU Industrial R&D Investment Scoreboard account for a significant share of economic activity in Denmark measured by employment, innovation activity, and R&D expenditures. Domestic firms listed on the scoreboard are the largest and most innovative, but subsidiaries of foreign scoreboard firms are still larger and more innovative compared to non-scoreboard firms. Relying on information from register data the report demonstrates that R&D spending among scoreboard firms is a complement to high skill jobs, while it substitutes low skill jobs. Thus, scoreboard firms are more involved in upgrading than polarization. Organisational change has an effect similar to that of R&D, while there is indication that innovation is a complement for low skilled jobs. Labour flows, particularly of high skilled workers, are stronger among scoreboard firms than between scoreboard firms and other firms. Thus, labour flows in networks instead of appearing in labour market pools, and non-scoreboard firms are kept out of the “knowledge spill-over” loops, providing them with fewer opportunities to learn from the scoreboard firms.

Read the full paper here.