Knowledge spillovers in labor demand induced by innovation

The innovation policies in Latin America and the Caribbean have paid little attention to services sector, although it represents around of 60% of both total employment and total aggregated value, and some subsectors have a great capacity to generate new knowledge and to spread it to the rest of the economy, for example the knowledge-intensive services and the creative industries. There is previous evidence of agglomeration patterns between businesses belonging to intensive innovation industries, particularly in knowledge-intensive services, high technology manufacture and creative industries, in developed countries. This investigation sets on trial a labor demand model deriving from innovation in order to analyze how important are knowledge intensive business services (KIBS), high and medium-high technology manufacture (HMHT) and creative industries (CI) knowledge spillovers in the generation of employment in a developing country. The proposed model uses cross-section data and analyzes in odds ratio terms the labor demand generated due to innovation (endogenous variable) and two groups of explicative variables: innovation capabilities (IC) and agglomeration economies, as proxy of knowledge spillovers (KS). A first group of estimations is performed for two innovation types: technological, and new products. A second group of estimations is also performed but only for the labor demand derived from the mixed innovation (adding the two prior ones) corresponding to one of the three innovative industries mentioned previously, i, to analyze the influence of the other sectors h, j, upon it, and it is successively repeated to complete the inter-sectoral effects of the KIBS, HMHT, and CI, among themselves. The results at average companie level indicate that, between the KS proxies, the KIBS concentration and the concentration of innovative companies of ICC and KIBS are the only ones that increases the odds ratio of labor demand derived from both innovation types: technological, and new products; while online search to R&D information and online customer service and support are the most important IC in the odds ratio to demand labor due to product innovation and technological innovation, respectly. At a cross-industry level, human capital (employees with higher education), online search to R&D information and training, are respectly the most important IC for the CI, KIBS and HMHT companies, while the KS shows a clear pattern of greater effects in favor of intersectoral KS over intrasectoral KS, in both CI and KIBS industries; and of innovative companies of CI over these same of KIBS, in the sense of that does exist a bigger influence from the first one over the latter. For the HMHT industry there no exist any significant KS. The findings show that KIBS and CI companies are an important sub group of the service sector in terms of capacity to promote innovation in the economy as a whole, this is the reason why it is worth being paid attention to by the innovation policy makers in developing countries.