High Technology and Income Distribution

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

James Galbraith and Travis Hale published an intriguing paper that
suggests that a few counties with the greatest high tech growth account
for all the in the degree of inequality between counties.  I asked
Jamie how much of result might be due to the fact that people migrate
to the affluent areas.
I cannot prove my suspicion.  The data in his paper looks reasonable.
All I have is my intuition, which is fallible.
Any thoughts?
Galbraith, James K. and Travis Hale. 2004. "Income Distribution and the
Information Technology Bubble."
utip.gov.utexas.edu/abstract.html#UTIP27.
"The period from 1994 to 2000 marks the period of largest
inequality growth, a 48% increase in the between-county index."
"We know that technology firms are not distributed uniformly, but are
clustered in centers such as Silicon Valley, Seattle, North Carolina.s
Research Triangle, Austin, and Boston.s Route 128 Corridor."
"Thirty-seven of the CNET Tech Index companies are headquartered in
counties that were among the top-10 largest losers in Theil Index
element from 2000 - 2001, including Santa Clara County.  Forty-six of
the eighty CNET companies are headquartered in the fifty counties that
had the largest decreases in their Theil elements from 2000 to 2001.
The ten counties that saw their Theil element gain the most from 2000
to 2001 host headquarters for 11 CNET Tech Index firms."
"A thought experiment along these lines might ask, what would have
happened if four hi-tech counties (Santa Clara, San Mateo, and San
Francisco Counties in California and King County, Washington) had not
seen per capita incomes explode, but had instead experienced more
moderate growth?  The results are quite impressive.  Substituting per
capita incomes for these 4 counties that grow along with the average
nationwide increase in per capita income from 1994 - 2000 -- an average
of 4.7% per annum -- results in an aggregate inequality curve that is
basically flat .... These four counties are so important to the
between-county Theil index, in other words, that their income changes
drive the aggregate figures that sum over 3100 counties."



--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
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