On the Determinants and Effect of Employment: An Empirical Assessment of Tourism and Innovation

The primary objective of this theses is to determine the determinants and effect of employment with particular regards to innovation and tourism. To this end, the thesis is divided into two self-contained sections. In the first section, the innovation employment nexus is analysed in a panel of 8 Asian economies within the framework of a panel cointegration methodology. Pooled mean group, mean group and the dynamic fixed effects estimators were employed to obtain the short-run values and the long run equilibrium values within a linear and non-linear specification. While the linear specification produced mixed results, the non-linear specification indicated a U-shaped non-linear relationship between r&d and employment with a local minimum at about the 75th percentile of the r&d data range. In the second section panel cointegration methodologies were employed to ascertain the impact of innovation on sectoral employment. FMOLS estimation results show that while r&d is employment creating in the services and high-tech manufacturing sectors, it is however employment constraining in the low-tech manufacturing sector. The third section examines how employment affects demand for tourism in the short and long run, controlling for the effects of income and relative prices within a panel of 32 Organisation for Economic Co-operation and Development (OECD) countries throughout the 1995–2016 period. Because of this, second-generation panel unit root tests, panel cointegration tests and panel data estimation techniques are employed. Results indicate that while employment has a positive association with outbound tourism in the short-run, its positive effect on outbound tourism in the long-run is however insignificant. Causality results uncover causality flowing from income to employment with a feedback, uni-directional causality flowing from income to outbound tourism and causality flowing from relative prices to outbound tourism with a feedback. Keywords: Innovation, Employment, Panel Cointegration, Cross-sectional Dependence, Causality.