Jisun Lim (Ph.D., Barun ICT Research Center)

Keun Lee (Prof., Department of Economics, Seoul National Univ.)

A few months ago, Sedol Lee, a professional Go player, was defeated by the computer program, AlphaGo. This incident directly raised people’s concerns about the situation that they can be replaced by AI in the near future. However, innovation does not necessarily have to result in negative job displacement effects; it can also have positive job creation effects. The outcome of the new demand from the latest production can result in the creation of new jobs. Therefore, the final employment effect due to innovation can be determined by analyzing the relative size of these two effects. Thus, empirical studies are required to further understand the impact of innovation and better assess the situation.

Many empirical research papers divide the type of innovation into two – process and product innovations. The employment effect for each type of innovation is estimated separately. “You have received a package. Please confirm your delivery at www.kq00.pw” Have you ever received strange messages via your mobile phone from an unknown number? If you receive these types of messages along with a suspicious URL link, you should proceed with caution and doubt the validity of the content. Smishing is short for “SMS phishing”. It is a security attack in which people are deceived into downloadingmalwares or viruses onto their mobile phone. Recently, smishing crime techniques have become more cunning and its damage has been increasing, thereby requiring effective ways to prevent and cope with smishing. Although government and public institutions recommend that smartphone users adopt antispam and anti-spyware software to block smishing, a great deal of users don’t heed this advice, increasing their vulnerability to smishing scams. Thus, the need for smartphone users’ security awareness and training is increasing. In this sense, news media can play an important role for enhancing security Process innovation, which normally brings about cost-saving effects, is known to have a negative effect on employment, while product innovation, which creates new demand, is known to have a positive effect on employment. Although most empirical analyses conclude that product innovation has a positive effect, research results for process innovation seems to vary. Therefore, this study exmines Korean manufacturing firms from 1999-2009 to estimate the employment effect of different type of innovations. In addition, the estimation results of Korean firms are compared with that of European firms during the similar period to identify similarities and differences between countries. Finally, the industry-level concentration ratio is used as a proxy for market structure to show how the employment effect of each type of innovation can be determined differently by the market structure.

According to the estimation results, product innovation of Korean manufacturing firms showed a positive effect on employment, whereas process innovation showed no significant effect. Furthermore, our research shows that the market structure has an impact on the different employment effects of process innovation. In more monopolistic markets, process innovation has a greater job displacement effect than in less monopolistic ones. This research not only confirms that employment effect of process innovation can be determined differently by market structure, but also emphasizes the importance of market structure in the perspective of employment.

** Types of technology innovation and their basic characteristics

[ process innovation ] improvement of an existing production process by adopting a new cost-efficient or
[ product innovation ] development of a new product or production of an existing product with improved performance or function 
energy-saving process, reducing the number of process steps without undermining the product quality, or employing a new technique resulting in quality improvement without changing the production process



Employment effect of innovation in different market structure: Firm-level analysis on Korean manufacturing firms | Presented by Society of open innovation: Technology, Market and Complexity



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