Income Inequalities and HighTech Agglomerations

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Income Inequalities and High-Tech Agglomerations

• Elsie Echeverri-Carroll
• Sofía G. Ayala
• Bureau of Business Research
• McCombs School of Business
• The University of Texas at Austin

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100 Most Populous Metropolitan Areas
W80th / W20th
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What are High-Tech Industries?
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A Standard Definition

• The Congressional Office of Technology
  Assessments describes high-technology firms as
  those that are engaged in the design,
  development, and introduction of new products and
  innovative manufacturing processes, or both,
  through the systematic application of scientific
  and technical knowledge (September 9, 1982)

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Standard DefinitionHigh-Tech Firms
Outputs
Inputs
Scientific Knowledge
New Products and Processes
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Passé DefinitionsHigh-Tech Industries

• Industries with an excess of job growth above the
  manufacturing average (Technical Marketing
  Association 1977)
• Industries with high RD investments (Technical
  Marketing Associates 1977)
• Industries that produce advanced technology
  products or products with a high degree of
  technical sophistication (Vinson and Harrington
  1979 Bureau of the Census, Science and
  Scientific Indicators 1998 OECD 1997)

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New DefinitionHigh-Tech Industries

• Manufacturing and services industries that employ
  a high proportion of scientific, technical, and
  engineering personnel
• (Markusen, Hall, and Glassmier 1986 USDL 1995,
  1997 Yu 2004 Chapple, Markusen, and Schrock
  2004, Echeverri-Carroll and Ayala 2004).

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High-Tech IndustriesIntensive in Technology
Oriented Workers (TOW)

• Methodology 1 Conversion SIC to NAICS
• Convert 3-digit 1987 SICs Intensive in TOW from
  previous studies to 6-digits 1997 NAICS
• Methodology 2 Obtaining High-Tech NAICS from
  Scratch
• Calculate proportion of TOW for 184 industries or
  6-digits NAICS 2002.

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Conversion SIC to NAICS
Correspondent 1997 NAICS
SICs included in each NAICS
High-Tech SIC
357 Computer and Office Equipment
333311 Automatic Vending Machine Manufacturing
3578
3581
334518 Watch, Clock Part Manufacturing
3579
3829
3873
3495
3915
334613 Magnetic and Optical Recording Media
Manufacturing
3577
3695
339942 Lead Pencil and Art Good Manufacturing
3579
3952
2531
333313 Office Machinery Manufacturing
3577
3578
High-Tech SICs identified in Hecker (1999) or
Chapple et al. (2004)
334111 Electronic Computer Manufacturing
3571
NAICS formed by High-Tech and Non-High-Tech SICs
334112 Computer Storage Device Manufacturing
3572
High-Tech NAICS
334113 Computer Terminal Manufacturing
3575
Non-High-Tech SICs
334119 Other Computer Peripheral Equipment
Manufacturing
3577
3578
334418 Printed Circuit Assembly (Electronic
Assembly) Manufacturing
3577
3661
3679
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Obtaining High-Tech NAICS from Scratch

• Calculate the proportion of TOW employed in each
  of the 184 manufacturing and services (NAICS)
  industries
• Technology-Oriented Workers include
• Engineers
• Life and Physical Scientists
• Mathematical Specialists (except Actuaries)
• Computer Specialists
• Exclude technicians and aides
• Data Source 2002 Occupational Employment
  Statistics (OES) survey data
• Setback OES does not report data that fail
  confidential, economic or statistical criteria

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Unreported Employment in the Manufacturing and
Services Industries
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Technology Oriented Workers (TOW) Intensiveness

• When is an industry (SIC or NAIC) intensive in
  TOW?
• Two-Times RuleUSDL (1990s)all industries with
  two times the national average of TOW
• Three-Times RuleChapple, Markusen, and Schrock
  (2004)industries with three times the national
  average of TOW
• 90th Percentile RuleMathur (2004) NAICS with a
  proportion of TOW that fall in the 90th
  percentile or above.

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High-Technology Industriesobtained from
scratch
3336
Engine, Turbine, and Power Transmission Equipment
Manufacturing
8.21
3339
Other General Purpose Machinery Manufacturing
8.18
3252
Resin, Synthetic Rubber, and Artificial Synthetic
Fibers and Filaments Mfg
8.08
3353
Electrical Equipment Manufacturing
7.99
5241
Insurance Carriers
7.37
3259
Other Chemical Product and Preparation
Manufacturing
7.2
3255
Paint, Coating, and Adhesive Manufacturing
6.81
5239
Other Financial Investment Activities
6.33
8112
Electronic and Precision Equipment Repair and
Maintenance
6.23
3253
Pesticide, Fertilizer, and Other Agricultural
Chemical Manufacturing
5.97
5173
Telecommunications Resellers
5.97
3331
Agriculture, Construction, and Mining Machinery
Manufacturing
5.97
3329
Other Fabricated Metal Product Manufacturing
5.88
 
 
 
3336
Engine, Turbine, and Power Transmission Equipment
Manufacturing
8.21
3339
Other General Purpose Machinery Manufacturing
8.18
3252
Resin, Synthetic Rubber, and Artificial Synthetic
Fibers and Filaments Mfg
8.08
3353
Electrical Equipment Manufacturing
7.99
5241
Insurance Carriers
7.37
3259
Other Chemical Product and Preparation
Manufacturing
7.2
3255
Paint, Coating, and Adhesive Manufacturing
6.81
5239
Other Financial Investment Activities
6.33
8112
Electronic and Precision Equipment Repair and
Maintenance
6.23
3253
Pesticide, Fertilizer, and Other Agricultural
Chemical Manufacturing
5.97
5173
Telecommunications Resellers
5.97
3331
Agriculture, Construction, and Mining Machinery
Manufacturing
5.97
3329
Other Fabricated Metal Product Manufacturing
5.88
 
 
 
42 NAICS
29 NAICS
18 NAICS
Two-Times Rule
Three-Times Rule
90th Percentile Rule
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Comparing Methodologies
3 NAICS
14 NAICS
Two-Times Rule
39 NAICS
Conversion
Scratch
1 NAICS
9 NAICS
28 NAICS
Three-Times Rule
Conversion
Scratch
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What are High-Tech Cities?
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Location Quotient (LQ)
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Top 5 High-Tech Cities (1998)

• Rochester, MN
• San Jose, CA
• Lubbock, TX
• Cedar Rapids, IA
• Boulder-Longmont, CO
• Source Milken Institute, Americas High-Tech
  Economy, 1999.

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High-Tech Poles
Source Milken Institute, Americas High-Tech
Economy, 1999.
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Top 5 High-Tech Poles, 2000

• San Jose
• Chicago
• Washington D.C.
• Boston
• New York
• Source Echeverri-Carroll and Ayala, Austin
  Aint Boston Economic Growth and Linkages with
  the Silicon Valley, Texas Business Review.
  Forthcoming.

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100 Most Populous Metropolitan Areas
W80th / W20th