The Greener the Better: Job Creation and Environmentally-Friendly Technological Change

This article investigates the link between environment-related innovation and job creation at firm level. Employing Italian data on 4507 manufacturing firms, matched with patent records for the period 2001-2008, we test whether "green" innovation, measured by the number of environment-related patents, has a positive effect on long-run employment growth that is specific with respect to non-environmental innovation. Results show a strong positive impact of "green" innovation on long-run job creation, substantially bigger than the effect of other innovations. Our findings are robust to a number of additional tests including controls for patents' quality and cost differential between generic and "green" innovation and endogeneity.