Who gains from high-tech growth? High-technology multipliers, employment and wages in Britain

Neil Lee and Stephen Clarke ()
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Stephen Clarke: The Resolution Foundation

SPRU Working Paper Series from SPRU - Science Policy Research Unit, University of Sussex Business School

Abstract: Do residents benefit from the growth of high-technology industries in their local economy? Policymakers invest considerable resources in attracting and developing innovative, high-tech industries, but there is relatively little evidence on this question. This paper investigates the labour market impact of high-tech growth on low and mid-skilled workers, using data on UK local labour markets from 2009-2015. It shows that high-tech industries – either traditional ‘high-tech’ or the digital economy – have a positive jobs multiplier, with each high-tech job creating around 0.9 local nontradeable service jobs, around 0.6 of which go to low-skilled residents. Employment rates for midskilled workers do not increase, but they benefit from higher wages. Yet the benefits for low-skilled workers come with a catch: they gain from increased employment rates, but lose as new jobs are poorly paid service work so lower average wages.

Keywords: living standards; wages; multipliers; high-technology; cities; inequality (search for similar items in EconPapers)
Date: 2017-07
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:sru:ssewps:2017-14

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