By Joze Damijan, University of Ljubljana
This paper adds to the literature by studying the impact of firms’ own technology and non-technology innovations as well as of innovation spillovers from vertically linked manufacturing and services industries on firms’ employment growth and skill upgrad-ing. We exploit unique representative samples of micro data for Spain and Slovenia for the period 1996 -2008. Our results show a substantial heterogeneity of innovation effects on employment and skill composition of labor. This implies that, first, the effects depend a lot on the specific structure of each economy, whereby results can vary substantially across industries that generate spillovers and across firms that are potential beneficiar-ies of the spillovers. And second, innovations in service industries do not seem to have a different spillover effect on employment and skill structure when compared to innova-tions in manufacturing industries.