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.