Using a panel dataset of 600 large British manufacturing firms we implement a symmetrically normalised method of moments estimator which is invariant to any normalisation rule. The parameter estimates from the Euler equation suggests that firms with a higher stock of innovations face lower adjustment costs of employment than less technologically progressive firms.
This finding is consistent with the observation that innovative firms in our dataset have higher variance of employment over time - lower adjustment costs allow them to move more quickly to equilibrium levels of employment. It is also consistent with other studies which find that innovative firms are better able to protect profit margins during adverse demand shocks and that they have faster net employment growth.