Spatial Agglomeration and Wages in the U.S. Biotechnology Sector

Abstract

Recent studies show that firms and workers benefit from the geographic concentration or spatial agglomeration of employment in a local labor market. While economic geographers have devoted considerable attention to the benefits firms receive from spatial agglomeration, the reasons workers may benefit in the form of higher wages are less clear. I draw from several theoretical perspectives in order to explain the relationship between spatial agglomeration and wages for U.S. biotech workers, including the new economic geography, new structuralism, organizational ecology, and the new economic sociology. Using the 1990 PUMS-L, I employ a hierarchical linear model in order to test hypotheses from these perspectives. The results indicate that biotech workers benefit more from industrial than urban agglomeration, and these benefits are primarily due to the greater degree of organizational diversity in large industry clusters and urban labor markets.