When the techies come to town…

The NY Times recently put out an alarmist article about the inflow of tech workers from Twitter and other startups moving into the city.

While some of the concerns it raised about maintaining a vibrant and diverse neighborhood are completely valid, it does not follow that the city should in any way restrict techies from coming to town. In fact, recent research by Enrico Morretti of UC Berkeley suggests that letting them come is one of the best things the city can do to help lower skilled workers.

We look at the effect of these industries on local communities. Cities that are able to attract an innovation cluster experience deep changes in their economic structure and their social fabric. Innovative industries bring good jobs to the cities where they cluster, both directly and indirectly. Remarkably, the main net beneficiaries are not necessarily the well educated workers who are directly employed by high tech firms, the scientists, the engineers, the creators of new ideas. The main beneficiaries of high tech clusters are often unskilled workers, and in many cases they do not even work directly in high tech firms. My own research shows that for each new high tech job in a city, 5 additional jobs are created outside high tech in that city. This multiplier effect stems from the fact attracting a new scientist to a city increases the demand for local services there: waiters, therapists, hair stylists, lawyers, doctors, housekeepers, personal trainers, etc. What is striking is that the high tech sector has the largest multiplier of all sectors. Compared to non high tech industries, high tech generates more than 3 times the number of additional local jobs. 


About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar. http://faculty.chicagobooth.edu/owen.zidar/index.html
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One Response to When the techies come to town…

  1. Pingback: Coveting Thy Neighbor’s Manufacturing – Is State Tax Competition A Zero Sum Game? | owenzidar

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