Employment, innovation and public debt across economies

The study here analyzes the relationship among labour, technological innovation and public debt to answer the following research question: How do R&D intensity and spending on human resources affect the employment of countries, also considering the critical macroeconomic indicator of the public debt? The study is based on 27 European countries over the 1995 to 2009 period: Belgium, Greece, Luxembourg, Denmark, Spain, The Netherlands, Germany, France, Portugal, Ireland, Italy, United Kingdom, Austria, Finland, Sweden, Poland, Czech Republic, Cyprus, Latvia, Lithuania, Slovenia, Estonia, Slovakia, Hungary, Malta, Bulgaria and Romania. The methodology applies econometric models of multiple regression with three explanatory variables, with and without interaction. The main findings are: Regression analysis shows significant interaction of education public expenditure and R&D spending on employment rate, whereas an increase of general government consolidated gross debt has a negative interaction for employment rate as well as for technological indicators. This empirical evidence provides some elements to support employment growth by innovation across countries; in particular, it is important to design effective and efficient long-run political economy of growth, considering the specificity socio-economic structure of countries, and to allow the economic system to dry out slowly and public debt without inserting frictional effects for patterns of economic and employment growth.