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The Silicon Valley Syndrome

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  • Sorenson, Olav
  • Kwon, Doris

Abstract

How does expansion in the high-tech sector influence the broader economy of a region? We demonstrate that an infusion of venture capital in a region appears associated with: (i) a decline in entrepreneurship, employment, and average incomes in other industries in the tradable sector; (ii) an increase in entrepreneurship and employment in the non-tradable sector; and (iii) an increase in income inequality in the non-tradable sector. An expansion in the high-tech sector therefore appears to lead to a less diverse tradable sector and to increasing inequality in the region.

Suggested Citation

  • Sorenson, Olav & Kwon, Doris, 2019. "The Silicon Valley Syndrome," SocArXiv zug2s, Center for Open Science.
    • Handle: RePEc:osf:socarx:zug2s
    DOI: 10.31219/osf.io/zug2s
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    2. Baker, Ted & Welter, Friederike, 2024. "Silicon Valley entrepreneurship – Revisiting a popular dream," Journal of Business Venturing Insights, Elsevier, vol. 21(C).

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