Examining employment growth in local labor markets across Europe, this article finds that each worker in a high-skilled occupation creates up to five extra jobs in local less-skilled-intensive services in the same region. However, it is also shown that there exist persistent differences in the size of this local high-tech job multiplier across regions. In particular, we find that the multiplier is larger in regions with higher immigration, an abundance of less-skilled workers, and lower gross output per capita. At the country level, we also show that this results in local high-tech job multipliers that are larger in Southern European countries than in the rest of Europe.
This paper shows that high-tech employment -broadly defined as all workers in high-tech sectors but also workers with STEM degrees in low-tech sectors-has increased in Europe over the past decade. Moreover, we estimate that every hightech job in a region creates five additional low-tech jobs in that region because of the existence of a local high-tech job multiplier. The paper also shows how the presence of a local high-tech job multiplier results in convergence is happening at a glacial pace, and some suggestive evidence is presented that lifting several institutional barriers to innovation in Europe's lagging regions would speed up convergence leading to faster high-tech as well as overall employment while also addressing Europe's regional inequalities.
AcknowledgementsWe would like to thank Ian Hathaway and numerous seminar participants for invaluable feedback.
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