High-Technology Agglomerations and Urban Inequalities

University Of Texas At Austin, Austin TX

Investigators

Abstract

The high-techology sector grew at twice the rate of the overall economy during the 1980s and four times faster during the 1990s. The boom in high-tech industries in the United States paralleled the rise in U.S. earnings inequality during the same period. These inequalities were not distributed homogeneously across regions. Preliminary research shows that wage inequalities seem to be higher in high-tech regions. Inequalities in high-tech regions are not only associated with class inequalities determined by earnings differences between those at the top and the bottom of the wage distribution, but also with the emergence of a social polarization across race and gender in high-tech regions. This research project will study high-technology spatial agglomerations and the relationship with different types of inequality, such as differences associated with gender, race, and educational levels, and differences within groups. Previous empirical research makes the strong assumption that regional economies with conditions associated with rising inequality at the national level should be associated with high local levels of inequality as well. It does not identify, however, the factors that ensure that some cities are affected more by those national trends responsible for wage inequalities. This project will identify the factors that make some cities more susceptible to the national trends. These micro-city factors emerge from the rich contribution of an abundant set of case studies of high-tech agglomerations as well as from recent studies on urban agglomerations and knowledge externalities. The project will use the Public Use Microdata Survey (PUMS) sample of the 2000 Census of Population to measure the effect of the high-tech industry on wages after controlling for observable characteristics of workers and metropolitan statistical areas. The model consists of individual-level and city-level equations with error terms at each level and an absence of correlation across levels. The research will address statistical issues related to endogeneity in the analysis of urban wage inequalities in the context of multilevel models. Policymakers in high-tech regions have become increasingly concerned that large segments of their populations are not reaping the benefits of economic growth associated with high-tech industrial growth. Social polarization is an increasingly important issue in the United States. This project will shed light on the degree to which it emanates from the growth of high-tech firms. The study will document and increasing understanding about the social polarization effects of high-technology growth so that their effects can be mitigated when the next expansionary phase starts in earnest. Without such new insights, the inequalities of the digital divide in high-tech regions may rend the urban social fabric in much the same way that earlier industrial waves wrought their divisions on cities.