Innovation I: Innovation and job creation, some thoughts…

I am attending a seminar at Stanford today on innovation and job creation. It is a topic I find really intriguing, and not least because I have spent quite some time thinking about what Hal Varian, Google’s chief economist said recently, that the problem with politicians is that they want more jobs and less work (i.e. more productivity). I think that is true, and in the context of shifts of the technological base of production this really is a challenge. I was sketching yesterday to find out what I think about it, and it is an on-going process, but here is where I got to.

Firstly, it seems as if technologies start out reducing work (i.e. increasing productivity), and hence destroying jobs. This is before industries have realized this is happened and internalized the changes, as well as started producing new jobs through innovation. If that is the case we end up with a rough picture like this:

That lead me on to a number of hypotheses/guesses that can be formulated about the relationship between innovation, incumbencies and job creation:

  1. The power of incumbencies is one strong determinant of the pace of job creation. Strong incumbents delay structural shifts locally, but cannot stop productivity growth globally, creating inefficiencies and delaying innovation and job growth.
  2. The over-all employment level is technology-independent, but depends primarily on taxes, labor laws and other factors in a society. No technology inherently predicts certain employment levels in a society. (I.e if we have a jobless society that is not because of the technologies of production in that society alone)
  3. The objective of public policy should be to shorten period A, but probably focus on period B, which I suspect to be more variable than A-B.

These guesses are rough sketches. Well, honestly, that is not much, but it is something. And I know I will get more food for though today, so let’s see what we end up with. Having read through von Hippel’s sources of innovation yesterday I also wonder about what we call jobs in any given society, and whether the newly emerging category of knowledge-intensive business services in the EU, for example, represents a new kind of job or not. One thing that I keep coming back to, and that seems to apply here too, is that our methods of measuring are fundamentally broken.

More to come…

3 thoughts on “Innovation I: Innovation and job creation, some thoughts…”

  1. You and that google chief need to specify if you are talking about innovations regarding disruptive technology or not.

  2. Interesting assessment. Is the difference between periods A and B purely temporal? Or are there specific events/strategies that take place in B that make it more variable and worthy of the focus of policy makers?

  3. @magnus: that is a good point. i sometimes think disruptive vs incremental is an underestimated dimension in innovation. i think i am talking about both.

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