1. The Links between Job Creation, Innovation, Education and Training: An Assessement of Policies Pursued at the EU Level
Dr. Holger Bonin
ZEW Mannheim (Germany)
Dr. Werner Hölzl WIFO Vienna (Austria)
European Parliament Committee on Employment and Social Affairs
Brussels
December 2nd, 2009

2. Agenda Background and Targets of the Study
The Innovation-Human Capital-Employment Triangle
Assessment of EU Policies
Conclusions

3. Background and Targets of the Study
Education, innovation and employment
are important building blocks within the Lisbon agenda
are highly interrelated macro economic variables
Central questions:
How do the policies pursued at the EU level interact?
Are the policies consistent?
Approach
Assessment of the conceptual and/or empirical basis of EU policies

4. Innovation-Human Capital-Employment Triangle
Innovation and Employment Change
Skills for Innovation
Skills Upgrading and Labour Market Frictions

5. Innovation is generally job creating
Innovation and Employment Change Quantity Dimension
Innovation is generally job creating
New technology yields lower prices which creates demand
Innovating firms obtain rents from their nl investment of innovating firms strong position of innovating firms
Workers sharing part of innovating firms’ profit consume more
Technological unemployment may put downward pressure on wages

6. Innovation and Employment Change Quality Dimension
Technical change is skill-biased!

7. Innovation and Employment Change Quality Dimension
Technical change is skill-biased!

8. Skills for Innovation Problems of innovative firms
Innovation requires inventors, especially at the technical frontier

9. Skills for Innovation
Innovation requires many different types of skills

10. Skill mismatches are an important feature on European labour markets
Skills Upgrading and Labour Market Frictions
Skill mismatches are an important feature on European labour markets

11. Assessment of EU Policies Consistency of Targets
Higher education targets are fully consistent with employment and innovation targets
Innovation targets are generally consistent with employment targets.
High employment targets are generally consistent with education targets.

12. Assessment of EU Policies Examples of Specific Policies
“New Skills for new Jobs”
rightly stresses the importance of the matching processes, BUT these are not only influenced by supply of wrong skills
stresses somewhat too much the gains from anticipation, given the uncertain nature of strucural change
ESF
can serve to retrain after innovation has materialized
can support skills for innovation, if carefully designed

13. Assessment of EU Policies Examples of Specific Policies
Integrated education and innovation policy
Co-ordinated ERI strategy in Finland
Development of higher education institutions based on content, i.e. preset focus of innovation policies
Integrated employment and education policy
Employment stability can promote vocational training more than unstable empoyment.
Good practice: short-term allowance schemes can preserve human capital in the face of economic shocks

14. Conclusions
General skills upgrading is a core strategy to achieve the Lisbon targets of more and better jobs while maintaining social cohesion.
Specialist skills for innovation are especially important, as they contribute to self-reinforcing growth cycles. It is useful to develop integrated education-innovation strategies.
Other than specialist skills are needed in the innovation process, especially for the diffusion and adaptation of new technology.
Employment policy instruments must be available, in order to respond to unwanted effects of skill-biased technical change.
The scope for anticipatory education policy is limited. Employment policies that aim at higher adaptability of the workforce and higher participation are more promising.