The number of empirical studies on the relationship between innovation and employment is still growing. But, the results of these studies are ambigous. Two important aspects are most of all neglected in existing studies: the endogeneity of market structure and a time lag of possible effects. For the empirical study, firm level data of the Mannheim Innovation Panel (MIP) are expanded to a sectoral level of aggregation and merged to publically available data of DESTATIS, the German statistical office. The Mannheim Enterprise Panel (MUP) was used to calculate sales concentration ratios. Based on a theoretical economic model a dynamic simultaneous equation system was estimated with Generalized Method of Momements (GMM) techniques. Both, market structure and R&D-intensity are determined simultaneously. As a first result, innovation activity is higher in competitive markets, but concentrating markets in the long run.