Neil Lee

Knowledge workers, cultural diversity and innovation: evidence from London

London is one of the worlds major cities and one of its most culturally diverse. A number of studies link diverse workforces and populations to levels of urban innovation, especially in global cities. While widely explored as a social phenomenon, there has been little work on the importance of Londons diversity for the citys businesses. This paper uses the 2007 London Annual Business Survey to investigate, exploiting the surveys unique coverage of both workforce composition and innovation outcomes. From a cross-section of over 2300 firms, we find significant positive relationships between workforce and ownership diversity, and product and process innovation. These provide some support for claims that Londons cultural diversity is a source of economic strength.

Ethnic diversity and employment growth in English cities

There are many reasons why cities with diverse populations may grow faster. Ethnic diversity might attract human capital, tourists or firms, increase productivity through diverse approaches to problem-solving or ethnic minority entrepreneurship. Yet there are also reasons to believe that diversity could be harmful, by leading to sub-optimal provision of public goods or reducing trust or social capital. Or it may be irrelevant, being merely a proxy for class. A number of studies have shown both positive and negative relationships between diversity and growth, using a range of different measures for ‘diversity’. This paper asks two questions: have more diverse English cities grown faster? And does measurement matter: is it important to have a multinational population or an ethnically diverse one? To answer these questions, in this paper a range of models are estimated for employment growth for 53 English cities between 1981 and 2001. The evidence suggests that cities with a high proportion of their populations born abroad in 1981 grew faster in the subsequent 10 years. Neither diversity by country of birth nor ethnic diversity is significant in the period 1991—2001. However, when variables accounting for both are included together, it appears that cities with a large number of migrants saw higher employment growth in the 1990s, but that ethnically diverse cities were less successful. The results presented here suggest that considerable attention needs to be paid to the variable used to indicate ‘diversity’ in these studies and that the impact of diversity varies according to nature of the groups any indicator for ‘diversity’ is representing.

Grim down South? The Determinants of Unemployment Increases in British Cities in the 2008–2009 Recession

Lee N. Grim down South? The determinants of unemployment increases in British cities in the 2008–2009 recession, Regional Studies. This paper investigates the impact of the 2008–2009 recession on unemployment in the sixty largest cities in Great Britain. The key determinant of changes in unemployment was the skills of the population, with highly skilled cities experiencing smaller increases. Cities with employment in financial services or manufacturing sectors experienced larger increases in unemployment. Whether a city has a specialized or a diverse economy appears less important than the industries in which the city is specialized. The results highlight a problem as the largest unemployment increases were in cities seen as having least potential for future growth.

Creativity, Cities, and Innovation

The creative industries have long been seen as an innovative sector. More recent research posits that creative occupations are also a fundamental, but overlooked, driver of innovation. Theory also suggests cities are important for both creative industries and occupations, with urban environments helping firms innovate. Yet little empirical work has considered the links between creative industries, occupations, cities, and innovation at the firm level. This paper addresses this gap using a sample of over 9000 UK SMEs. Our results stress that creative industries firms are more likely to introduce original product innovations, but not those learnt from elsewhere. Creative occupations, however, appear a more robust general driver of innovation. We find no support for the hypothesis that urban creative industries firms are particularly innovative. However, creative occupations are used in cities to introduce product innovations learnt elsewhere. The results suggest that future work needs to seriously consider the importance of occupations in empirical studies of innovation.

Original Innovation, Learnt Innovation and Cities: Evidence from UK SMEs

One of the key benefits of cities is that they allow the exchange of knowledge and information between economic actors. This may have two effects: it may create the conditions for entirely new innovations to emerge; and, it may allow firms to learn innovations from those nearby. Yet few studies have considered the impact of an urban location on whether innovations are original or learnt. This paper tests these hypotheses using survey evidence for over 1600 UK SMEs. It is shown that, while urban firms tend to be both product and process innovators, urban firms are disproportionately likely to introduce process innovations which are only new to the firm, rather than entirely original. Instead, the urban advantage in product innovation appears to come from a combination of the effects. The results highlight a need for a nuanced view of the link between cities and innovation.

Powerhouse of cards? Understanding the ‘Northern Powerhouse’

ABSTRACT Powerhouse of cards? Understanding the ‘Northern Powerhouse’. Regional Studies. The Northern Powerhouse is the UK government’s latest attempt to reduce regional disparities. By bringing together the cities of the north into a functional economy, the aim is to create an agglomeration with the scale to counterbalance London. This paper summarizes and critically reviews this agenda. While sympathetic to the basic idea, it argues that the Northern Powerhouse is a vague and problematic concept. It can be understood both as an economic development strategy and as a political brand, giving focus to disparate and often pre-existing policies. It has meant new resources and institutional change, but is geographically fuzzy with insufficient funding to achieve its unclear aims.

The Creative Industries and Urban Economic Growth in the UK

Policy makers in the UK see the creative industries as a key sector for regenerating inner cities and stimulating flagging urban economies. The creative industries may raise productivity through spillovers or as part of the production processes of other firms. Creative firms may squeeze out other, less productive sectors. Highly skilled workers may be attracted to creative cities. Or the creative industries may thrive in growing cities with strong demand for their products. This paper tests the link between the creative industries and wage and employment growth in a panel of travel-to-work areas from 2003 to 2008. The results suggest the creative industries drive both wage and employment growth in other sectors. However, when only urban areas are considered the creative industries drive wage growth but do not increase employment. These findings are consistent with the idea that the creative industries help other sectors grow, but may squeeze out declining industries from urban areas.

Place, sorting effects and barriers to enterprise in deprived areas: Different problems or different firms?

Policies to stimulate enterprise in deprived areas typically attempt to remove the specific obstacles faced by firms in deprived locations. Yet there is little evidence that firms in deprived areas actually perceive different problems to those in more affluent places. Alternatively, different types of firms may locate in deprived places. This article uses a sample of 7670 English SMEs to investigate this issue. It asks two questions: Do firms in deprived areas perceive different barriers to success than other firms? And is this because of their location (a ‘place’ effect) or other characteristics (a ‘firm’ effect)? We find only limited evidence that ‘place’ effects are in operation: of nine potential obstacles only a lack of access to finance is significant, controlling for other firm characteristics. However, this finding may be important given that firms in deprived areas are equally likely to be growth orientated.

The Creative Industries, Creative Occupations and Innovation in London

Abstract London is a global hub of the creative industries. These industries are seen as both innovative in themselves and an input in innovation processes in other sectors. Yet few studies have tested these relationships. This article investigates these issues using large-scale survey data for London. Using four measures of product and process innovation, we find no evidence that Londons creative industries are more innovative than other sectors. Yet, individuals doing creative occupations in other sectors are a robust driver of product innovation in Londons firms. The results suggest that occupations performed in London may be an important driver of product innovation in the city, and firms in other sectors may use creative occupations to develop new products in the capital. This finding is supportive of policies attempting to stimulate the creative industries by integrating creative occupations into firms across the whole economy.

Are innovative regions more unequal? Evidence from Europe

Studies of the United States have suggested that the most innovative areas are also the most unequal. There are a number of potential processes that might lead to this. Innovation may raise the return of human capital in ways which can lead to localised inequality. Innovative industries may be subject to greater wage polarisation or offer more erratic returns than other industries. Moreover, the affluent may hire others to work in poorly paid personal service employment nearby. However, while there is some evidence for these processes in the US, whether this applies in the European case is less certain. I use the European Community Household Panel and the Eurostat Regio database to test the link between innovation and wage inequality in a panel of European regions for the period 1996–2001. Two measures of innovation are used: employment in knowledge-based industries and the level of patenting in a region. The results are indicative of a positive link between regional innovation, as measured by patenting, and inequality. In contrast, there is little evidence of a link between knowledge-based industries and inequality, with the exception of a positive relationship between employment in knowledge-intensive financial services and inequality.