Using nationally representative panel microdata from Uganda’s 2011 and 2014 Innovation Surveys, this paper estimates the causal
effect of technological change on firm-level employment. We apply the Harrison–Jaumandreu–Mairesse (2014) decomposition that
distinguishes employment generated by product innovation from labour saved by process innovation. Product innovators created, on
average, 0.35 net jobs per 100 existing employees annually, whereas process innovation shows no statistically significant aggregate
employment effect. Displacement effects appear only when process innovation is introduced in isolation; these are fully offset when
accompanied by new products. The origin of the idea and the locus of its implementation matter: innovations developed and
commercialised in-house (user innovations) generate twice as many jobs as those imported from suppliers or competitors.
Employment elasticities are three times larger in firms with ≥50 employees and in agro-processing and metal-engineing sectors.
Finally, innovating firms are 47 % more likely to survive the 2011-2014 period, indicating that innovation is simultaneously a driver of
job creation and firm resilience. Policy simulations show that reallocating 1 % of GDP toward tax incentives for in-house R&D in
medium and large firms would yield 18 000–22 000 additional formal jobs within five years—four times the equivalent cost of

untargeted investment subsidies. Targeted support for user-driven product innovation in growth-oriented sectors therefore offers the
highest return for employment-centred industrial policy in Uganda and, by extension, in skill-scarce, demand-constrained economies
across Sub-Saharan Africa.