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Innovation and spatial inequality in Europe and USA

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  • Rodríguez-Pose, Andrés
  • Lee, Neil

Abstract

Innovation is a crucial driver of urban and regional economic success. Innovative cities and regions tend to grow faster and have higher average wages. Little research, however, has considered the potential negative consequences: as a small body of innovators gain relative to others, innovation may lead to inequality. The evidence on this point is fragmented, based on cross-sectional evidence on skill premia rather than overall levels of inequality. This paper provides the first comparative evidence on the link between innovation and inequality in a continental perspective. Using micro data from population surveys for European regions and US Cities, the paper finds, after controlling for other potential factors, good evidence of a link between innovation and inequality in European regions, but only limited evidence of such a relationship in the United States. Less flexible labour markets and lower levels of migration seem to be at the root of the stronger association between innovation and income inequality in Europe than in the US.

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  • Rodríguez-Pose, Andrés & Lee, Neil, 2012. "Innovation and spatial inequality in Europe and USA," CEPR Discussion Papers 9139, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9139
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    More about this item

    Keywords

    Cities; European union; Inequality; Innovation; Regions; United states;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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