The Interplay between R&D Intensity, Institutional Quality and Employment. Evidence from the Italian NUTS-3 Regions

R&D expenditures have long been recognized as an important innovation input which typically has a job-creation effect. However, the nexus between R&D and employment has mostly been investigated at the sectoral or firm level, while the territorial dimension has received considerably less attention. In this paper, we assess whether regional R&D has spurred regional employment using a sample of 102 Italian NUTS-3 regions for the 2006-2020 period. To this end, we perform both panel FE and GMM regressions and, in some specifications, we account for institutional quality as well. According to our findings, there is a positive and significant causal relationship between regional R&D intensity and the regional employment rate. In addition, R&D intensity partly mediates the positive link between institutional quality and employment.