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Do low-skilled workers gain from high-tech employment growth? High-technology multipliers, employment and wages in Britain

Neil Lee and Stephen Clarke

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Do low-skilled workers 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 the distribution of the benefits. 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 STEM-intensive ‘high-tech’ or digital economy – have a positive jobs multiplier, with each 10 new high-tech jobs creating around 7 local non-tradeable service jobs, around 6 of which go to low-skilled workers. Employment rates for mid-skilled workers do not increase, but they benefit from higher wages. Yet while low-skilled workers gain from higher employment rates, the jobs are often poorly paid service work, so average wages fall, particularly when increased housing costs are considered.

Keywords: wages; labour markets; multipliers; high-technology; cities; Inequality; ES/M007111/1 (search for similar items in EconPapers)
JEL-codes: E24 J21 J31 L86 O18 R11 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-mac and nep-ure
Date: 2019-11-01
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Published in Research Policy, 1, November, 2019, 48(9). ISSN: 0048-7333

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