Wage differentials and the spatial concentration of high‐technology industries

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. Copyright (c) 2008 the author(s). Journal compilation (c) 2008 RSAI.

On the Relationship between Innovation and Wage Inequality: New Evidence fromCanadian Cities

“…Looking at the wage structure of various industrial clusters in North America, Schoales () shows that the most innovative clusters tend to pay higher average wages. Echeverri‐Carroll and Ayala () also find evidence of a wage premium for high‐tech cities in the United States. The reasoning here is that the more innovative industries (and by extension urban areas) that rely heavily on new technologies will pay their workers higher wages than industries using older or more mature technologies.…”

Is There Trickle-Down from Tech? Poverty, Employment, and the High-Technology Multiplier in U.S. Cities

“…Sachs (2003), for example, suggests that innovation and new technology has the potential to significantly reduce overall poverty, while Glasmeier (1991) has documented the importance of high-technology industries in tackling poverty in disadvantaged rural economies. And the 'knowledge spillovers' generated by the sector are perceived to benefit entrepreneurs and workers in other sectors, with their wages increasing as a result (Echeverri-Carroll and Ayala, 2009). …”

“…new employment or higher wages). It uses panel data, as well as an instrumental variable approach, addressing some concerns about endogeneity which may cause problems in cross-sectional work (Echeverri-Carroll & Ayala, 2009). Finally, it also contributes to the growing evidence reaped by geographers on the link between technological change and inequality (e.g.…”

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