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The greener the better? Job creation effects of 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.