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Richard Florida and his colleagues at the Martin Prosperity Institute recently released an interesting study that blends Michael Porter’s industrial cluster theory and Florida’s research on creative and routine occupations to explore their impact on economic development.

In Creativity, Clusters and the Competitive Advantage of Cities, the authors identify four major industrial-occupational categories: creative occupations in traded industries (creative-in-traded), creative occupations in local industries (creative-in-local), routine occupations in traded industries (routine-in-traded), and routine occupations in local industries (routine-in-local). The study examines the shares of American employment in each category and analyzes their relationships with regional economic development indicators in more than 250 metro areas in the United States.

The study finds that employment in the creative-in-traded category is positively associated with higher levels of innovation and higher levels of economic output per capita. Metro areas with higher shares of this kind of employment see higher overall incomes and wages, with creative-in-traded industries having the highest wages of the four categories. According to the study, 46% of workers in traded industries, which compete based on creativity and innovation, are in creative jobs. This category tends to be clustered along the East and West Coasts of the US. It’s not all good news for metro areas with higher shares of creative-in-traded employment, though. There is a significant positive association between shares of creative-in-traded jobs and higher inequality, while the share of routine-in-traded jobs is negatively associated with inequality.

On the other end of the spectrum, routine-in-traded (largely in manufacturing) and routine-in-local employment is negatively associated with wages and innovation, and routine-in-local employment is negatively associated with economic output per capita. To counter this, the report argues that industry and governments must work to make routine jobs into more creative ones in order to increase competitiveness and economic sustainability.

This post first appeared in TINAN 69. Subscribe to TINAN for the latest economic development news and resources.