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Is there trickle-down from tech? Poverty, employment and the high-technology multiplier in US cities

Listed author(s):
  • Lee, Neil
  • Rodríguez-Pose, Andrés

High-technology industries are seen as important in helping urban economies thrive, but at the same time they are often considered as potential drivers of relative poverty and social exclusion. However, little research has assessed how high-tech affects urban poverty and the wages of workers at the bottom of the pyramid. This paper addresses this gap in the literature and investigates the relationship between employment in high-tech industries, poverty and the labor market for non-degree educated workers using a panel of 295 Metropolitan Statistical Areas (MSAs) in the United States between 2005 and 2011. The results of the analysis show no real impact of the presence of high-technology industries on poverty and, especially, extreme poverty. Yet there is strong evidence that tech-employment increases wages for non-degree educated workers and, to a lesser extent, employment for those without degrees. These results suggest that while tech employment has some role in improving welfare for non-degree educated workers, tech-employment alone is not enough to reduce poverty.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 11341.

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Date of creation: Jun 2016
Handle: RePEc:cpr:ceprdp:11341
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