Positive employment effects of increasing material efficiency

Abstract

As raw and processed materials constitute a major share of the cost of inputs to industrial production in all developed countries and since the raw material crisis in 2009 revealed the criticality of the raw material supply worldwide, the increasingly efficient use of material resources has become an important point on the political agenda. One way to promote this increase is funding of research in efficiency-increasing technology innovations. Data describing the physical and economic effects of sixteen such innovations are used to model on the basis of input-output analysis the employment effect of these technologies once their full application potential in Germany would be exploited. It turns out that the employment effect is positive and its strong robustness is based on the combination of three promoting factors, each of which alone increases the likelihood of increasing employment. These factors refer to the profitability of efficiency-increasing technologies and to the import of foreign value added and the change in labour productivity characterizing many instances of material efficiency increase.