ABSTRACT Innovation and Employment in Patenting Firms: Empirical Evidence from Europe *

This paper explores the possible job creation effect of innovation activity. We analyze a unique panel dataset covering almost 20,000 patenting firms from Europe over the period 2003-2012. The main outcome from the proposed GMM-SYS estimations is the labourfriendly nature of innovation, which we measure in terms of forward-citation weighted patents. However, this positive impact of innovation is statistically significant only for firms in the hightech manufacturing sectors, while not significant in low-tech manufacturing and services.