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

Author

Listed:
  • Neil Lee

    (Department of Geography & Environment, London School of Economics & Political Science)

  • Stephen Clarke

    (The Resolution Foundation)

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.

Suggested Citation

  • Neil Lee & Stephen Clarke, 2017. "Who gains from high-tech growth? High-technology multipliers, employment and wages in Britain," SPRU Working Paper Series 2017-14, SPRU - Science Policy Research Unit, University of Sussex Business School.
    • Handle: RePEc:sru:ssewps:2017-14
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    References listed on IDEAS

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    3. E. A. Edinak & A. R. Sayapova & A. A. Shirov, 2022. "Endogenization of Household Consumption in the Expanded Input–Output Model," Studies on Russian Economic Development, Springer, vol. 33(1), pages 1-10, February.
    4. Goos, Maarten & Rademakers, Emilie & Röttger, Ronja, 2021. "Routine-Biased technical change: Individual-Level evidence from a plant closure," Research Policy, Elsevier, vol. 50(7).
    5. Gutierrez-Posada, Diana & Kitsos, Tasos & Nathan, Max & Nuccio, Massimiliano, 2021. "Do Creative Industries Generate Multiplier Effects? Evidence from UK Cities, 1997-2018," SocArXiv xs8zg, Center for Open Science.

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    Keywords

    living standards; wages; multipliers; high-technology; cities; inequality;
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