State-by-state variations in high-tech employment through the great recession

• In recent years increases in high-tech service employment have been largely offset by decreases in high-tech manufacturing employment.
• Over the 2007–2012 period changes in high-tech employment have varied substantially across states.
• States with substantial pre-2007 high-tech employment tended to gain (or lose less) employment over the 2007–2012 period.
• State economic development, labor, and tax policies were related to employment changes. Sometimes in unexpected ways.

This paper explores the relationship between state-level high-tech employment and state economic development, labor, and tax policies over the 2007–2012 period. During this period national high-tech manufacturing employment decreased, national high-tech service employment increased and the nation experienced a severe recession. Overall high-tech employment grew very little during this time period but changes in high-tech employment varied substantially from state-to-state. This paper asks why. A two-stage empirical model is developed and estimated. Among other things the results indicate that these policies did influence employment in the period although perhaps in unexpected ways.