The effect of innovation on unemployment levels in different educational groups

Sammanfattning: This paper investigates what effect innovation has on unemployment rates in different educational groups. Two measures for innovation is used, patent applications and triadic patent families. How different educational groups is affected is something this paper aim to contribute to since not much research has been done in this area. The paper also means to find if these effects are different in poor countries compared to rich countries. Previous research has showed mixed results concerning the effect that innovation has on unemployment, which makes this topic interesting. One earlier study imply that less developed countries might transfer easily to new labour market conditions while another point out that highly educated workers is the way forward. A panel dataset of 24 countries, studying the years 1998 to 2017, has been constructed. The countries are all European except for the United States and Canada. Using fixed effects regressions with fixed effects for both country and year as well as pooled OLS regressions with clustered standard errors, statistically significant positive effects was found, however not in all education groups. All educational groups seem to be affected positively, however. The difference between poor and rich countries was not clear, since no statistically significant results was obtained. This paper concludes that, to fully capture the effect that innovation has on unemployment, and to obtain results which can provide policymakers with useful information, patents alone might not be sufficient.