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Wage differentials and the spatial concentration of high‐technology industries

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  • Elsie Echeverri‐Carroll
  • Sofia G. Ayala

Abstract

Workers in high‐tech cities earn raw wages that are on average 17% higher than wages of workers in other cities. Using a large sample from the 5% PUMS of the 2000 Census of Population, this paper presents econometric evidence of a ‘tech‐city wage premium’ of approximately 4.6% that is not the result of higher‐ability people self‐selecting to live in high‐tech cities, but rather the result of high‐tech cities actually making workers more productive. Although knowledge spillovers are difficult to assess, we use the concepts of the new economic geography and evidence from empirical studies of high‐technology regions, such as Silicon Valley and Austin, Texas, to support the view that workers who live in high‐tech cities might be more productive because they benefit from a larger supply of knowledge spillovers than workers who live in low‐tech cities. Resumen Los trabajadores de ciudades que cuentan con alta tecnología ganan salarios brutos que son un 17% más alto en promedio que los de trabajadores de otras ciudades. Utilizando una muestra grande del 5% de PUMS del Censo Poblacional del año 2000, este artículo presenta pruebas econométricas de una “prima salarial por ciudad‐tecnológica” de aproximadamente un 4.6% que no es una consecuencia de personas más cualificadas que eligen vivir en ciudades‐tecnológicas, sino más bien el resultado de ciudades tecnológicas que de hecho logran que los trabajadores sean más productivos. Aunque los spillovers de conocimiento son difíciles de evaluar, utilizamos los conceptos de la nueva geografía económica y pruebas de estudios empíricos de regiones de alta tecnología como Silicon Valley y Austin, Texas, para apoyar la opinión de que los trabajadores que viven en ciudades de alta tecnología podrían ser más productivas porque se benefician de un suministro mayor de spillovers de conocimiento que los trabajadores de ciudades de baja tecnología.

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  • Elsie Echeverri‐Carroll & Sofia G. Ayala, 2009. "Wage differentials and the spatial concentration of high‐technology industries," Papers in Regional Science, Wiley Blackwell, vol. 88(3), pages 623-641, August.
    • Handle: RePEc:bla:presci:v:88:y:2009:i:3:p:623-641
    DOI: 10.1111/j.1435-5957.2008.00199.x
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    Cited by:

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    2. Daniel Felsenstein, 2015. "Factors Affecting Regional Productivity and Innovation in Israel: Some Empirical Evidence," Regional Studies, Taylor & Francis Journals, vol. 49(9), pages 1457-1468, September.
    3. Tommaso Ciarli & Alberto Marzucchi & Edgar Salgado & Maria Savona, 2018. "The Effect of R&D Growth on Employment and Self-Employment in Local Labour Markets," SPRU Working Paper Series 2018-08, SPRU - Science Policy Research Unit, University of Sussex Business School.
    4. Echeverri-Carroll, Elsie L. & Oden, Michael D. & Gibson, David V. & Johnston, Evan A., 2018. "Unintended consequences on gender diversity of high-tech growth and labor market polarization," Research Policy, Elsevier, vol. 47(1), pages 209-217.
    5. 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.
    6. Lee, Neil & Clarke, Stephen, 2019. "Do low-skilled workers gain from high-tech employment growth? High-technology multipliers, employment and wages in Britain," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    7. Neil Lee & Andrés Rodríguez-Pose, 2013. "Innovation and spatial inequality in Europe and USA," Journal of Economic Geography, Oxford University Press, vol. 13(1), pages 1-22, January.
    8. Winters, John V., 2014. "STEM graduates, human capital externalities, and wages in the U.S," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 190-198.
    9. Sébastien Breau & Dieter F. Kogler & Kenyon C. Bolton, 2014. "On the Relationship between Innovation and Wage Inequality: New Evidence from Canadian Cities," Economic Geography, Clark University, vol. 90(4), pages 351-373, October.
    10. Kemeny, Thomas & Osman, Taner, 2017. "The wider impacts of high-technology employment," LSE Research Online Documents on Economics 101854, London School of Economics and Political Science, LSE Library.
    11. Kemeny, Tom & Osman, Taner, 2018. "The wider impacts of high-technology employment: Evidence from U.S. cities," Research Policy, Elsevier, vol. 47(9), pages 1729-1740.
    12. Sefa Awaworyi Churchill & Bin Peng & Russell Smyth & Quanda Zhang, 2022. "R&D intensity and income inequality in the G7: 1870–2016," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 263-282, July.
    13. Alberto Dalmazzo & Guido de Blasio, 2011. "Amenities and skill‐biased agglomeration effects: Some results on Italian cities," Papers in Regional Science, Wiley Blackwell, vol. 90(3), pages 503-527, August.
    14. Abolfazl Shahabadi & Morteza Nemati & Seyed Ehsan Hosseinidoust, 2017. "The Effect of Knowledge Economy Factors on Income Inequality in the Selected Islamic Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(4), pages 1174-1188, December.

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