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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
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Agenda Background and Targets of the Study
The Innovation-Human Capital-Employment Triangle Assessment of EU Policies Conclusions
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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
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Innovation-Human Capital-Employment Triangle
Innovation and Employment Change Skills for Innovation Skills Upgrading and Labour Market Frictions
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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
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Innovation and Employment Change Quality Dimension
Technical change is skill-biased!
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Innovation and Employment Change Quality Dimension
Technical change is skill-biased!
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Skills for Innovation Problems of innovative firms
Innovation requires inventors, especially at the technical frontier
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Skills for Innovation Innovation requires many different types of skills
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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
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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.
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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
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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
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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.
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