ABSTRACT For more than a decade, the United States has produced more new jobs than most other industrialized nations--nearly 20 million new jobs during 1973-1984. However, none of the aggregate numbers reveals anything about the types of jobs created or how much they pay. The following facts are pertinent: (1) compared to the period 1973-1979, the net new employment created between 1979 and 1984 has occurred disproportionately at the low extreme of the wage salary distribution (i.e., below $7,000 in 1984 dollars); (2) between 1979 and 1984, the number of workers earning more than the 1973 median ($14,024 in 1984 dollars) actually declined by 1.8 million, while workers earning less increased by some 9.9 million; (3) white women continued to show small gains in their access to higher wage jobs, but the proportion of women in low-wage employment also increased; (4) employment for minority men and women shows a renewed trend toward low wages; (5) the disproportionate expansion of the low-wage sector is especially prevalent among younger workers; (6) the trend toward low-wage employment is greatest in the Midwest; and (7) the tendency toward low wages holds for year-round full-time workers as well as for those who do not work as often. In sum, the economic restructuring of the 1980s has left in its wake a proliferation of low-wage jobs. If this pattern continues, the standard of living of a growing proportion of the American work force will be significantly jeopardized. (KC)

In this elegantly argued book, political economists Barry Bluestone and Bennett Harrison examine America's great surge of economic expansion in its historical context to demonstrate the causes for the vibrancy of our economy. This is a Century Foundation Book.

the policy debates about economic development and the rise of the theory of flexible specialization during the 1980s, I became discontented with the extent to which the proposition was being repeated that new developments in competition and technology were systematically privileging smaller forms of business enterprise. But these were seriously theorized arguments, so I tried to accord them the respect they were due, in the course of offering my critique. Less deserving of respectful treatment were the seemingly endless repetitions of the line, originating with David Birch, that "nearly χ percent of all new jobs are created by [small, mediumsized, "gazelle-like" take your pick] firms," a statement in which χ was sometimes said to be "50," sometimes "75," sometimes "90," sometimes even "virtually 100." Policymakers, including governors and mayors, repeated these assertions, and drew upon them as "evidence" that policies should systematically favor these small business "job generators." Much of this

CEPA Working Paper Series IGlobalization, Labor Markets, and Social PolicyA Project Funded by the John D. and Catherine T. MacArthur FoundationWorking Paper No. 5February 1998 (Revised August 1998)Center for Economic Policy AnalysisNew School for Social Research80 Fifth Avenue, Fifth Floor, New York, NY 10011-8002Tel. 212.229.5901 i Fax 212.229.5903http://www.newschool.edu/cepa

Regional economists, planners, and geographers have for many years drawn a useful distinction in characterizing the properties of spatial agglomerations or growth centers. However, they are just now providing evidence for the hypothesis of Jane Jacobs: that urbanization is at least as relevant as localization in explaining spatial patterns of innovation and economic growth. The results of our research, conducted at the level of individual companies and plants rather than on the aggregate economies of cities and regions, also corroborate Jacobs’ theory. Across a national sizestratified random cross-section of almost 1,000 manufacturing establishments, the likelihood that managers will adopt new technology is significantly related to the types of counties in which their factories are situated, and less strongly to the proximity or density of clusters of similar businesses. In short, in manufacturing—and probably even more so in services—urbanization definitely matters, while the case for localization is less strong. Over the past decade, economists, sociologists, political scientists, and theorists of business strategy have rediscovered industrial geography. For some (Arthur, 1989; Enright, 1993, 1994a, 1994b; Glaeser et al., 1992; Henderson, 1988, 1994; Krugman, 1991; Porter, 1990; Romer, 1986), the principal research question is to determine why economic activity in so many industries tends not to be evenly distributed among cities and regions but rather to be relatively concentrated in a few “signature” locations, such as microelectronics in Silicon Valley, optics in Rochester, and clothing and jewelry in New York City. In other words: Why do firms commonly cluster together in economic space—especially in Harrison, Kelley, and Gant 62 Cityscape an era with an apparent ubiquity of basic services, a decline in the relative importance of heavy-to-move raw materials, and vast improvements in the technical and organizational means of interregional/international production and distribution coordination? For most economists, and also for some geographers (notably Scott [1990, 1994]), the answer lies in theories about the nature and functioning of external agglomeration economies in particular and, more generally, of internal and external increasing returns to scale. Given that spatial clustering occurs in so many industries, one research question—associated with revived interest in the sources of long-run (“Schumpeterian”) economic growth throughout the social sciences—is how and to what extent agglomeration promotes technological learning. All models of the diffusion of an innovation assume the existence of some social process for interorganizational learning. Differences among locales in the provision of opportunities for one organization to learn from others constitute an important field for the study of such processes. In the view of sociologists, geographic proximity may enhance social proximity by allowing frequent face-to-face interactions and the subsequent creation of trust among key individuals in various firms (Park and Burgess, 1967; Perrow, 1992; Sabel, 1992; Sako, 1992; Simmel, 1971). This proximity may create an environment in which skilled workers, engineers, and managers are more likely to communicate with nearby individuals in the same or related industries who are facing similar production problems. The intent of such communication (when it is not simply serendipitous) is to learn what those in similar organizational settings are doing and to acquire information about new technological and product developments in the industry. Reliable information from trustworthy individuals and organizations is thought to be an important ingredient in the acceptability of an innovation and in the willingness of followers to adopt it. 2 In the hands of theorists of industrial economics and business strategy, transactions cost economics also provides a number of hypotheses about the reason why location within clusters may facilitate interorganizational learning (Enright, 1993). 3 Thus proximity may reduce the cost of negotiating and monitoring contracts, in the same manner that locally embedded social relationships reinforce implicit “handshake agreements.” Whether socially embedded or not, by increasing the likelihood of familiarity, proximity may reduce the incidence of opportunistic behavior by suppliers, customers, and even competitors. For example, the availability of many alternative local suppliers or customers may provide a firm with insurance against opportunistic behavior by existing partners, thereby reducing asset specificity (that is, dependence on transaction partners whose possession of or control over unique resources, competencies, or information gives them extra bargaining power). Economic geographers, planners, and social scientists have combined these approaches to craft a rich body of work on the formation and reproduction of socalled industrial districts (Best, 1990; Enright, 1994a; Perrow, 1992; Piore and Sabel, 1984; Saxenian, 1994; Scott, 1988, 1990; Storper and Scott, 1989; Storper, 1993). Industrial districts are collections of information about geographically bounded, mostly smalland medium-sized enterprises (SMEs), alternately competing and cooperating with one another and specializing in particular aspects or stages of production that are coordinated (governed) at the level of the region (district) as a whole rather than within a particular firm. A lively debate has ensued, in which critics question the importance of local division of labor among the SMEs vis-à-vis the system-shaping role of large public and private organizations. Others are reexamining the very stability of the better known districts, from Toyota City and Silicon Valley to the clusters that make up the so-called Specialization Versus Diversity in Local Economies Cityscape 63 “Third Italy” (Florida and Kenney, 1990; Glasmeier, 1991; Harrison, 1994a, 1994b; Martinelli and Schoenberger, 1991). Central to this debate are concerns about how and to what extent technological learning is enhanced by the proximity in the districts of those involved: business firms and a mosaic of social and government organizations. 4 This interest in the agglomeration-innovation nexus has spread to the realm of public policy. One element of new U.S. policies (at both the Federal and State levels) designed to modernize manufacturing is a concern with more effective dissemination of information that will lead SMEs, in particular, to retool production facilities with modern computer-controlled equipment (Kelley and Arora, 1996; Kelley and Watkins, 1995; Shapira, 1994; U.S. Congress, Office of Technology Assessment, 1990). Another element is a desire on the part of policymakers to encourage the explicit creation of consortia of companies and local governments that are aimed at creating new—or reinforcing existing—growth poles and growth centers organized around particular sectors and technologies, such as the electric car (Scott and Bergman, 1993). That was an explicit objective of the (unfortunately short-lived) Regional Technology Alliance (RTA) component of the Federal Government’s Technology Reinvestment Project (TRP). Still other policy experiments are aimed at creating and nurturing industrial districts on the Italian model, complete with a matrix of supporting local public services (Bosworth and Rosenfeld, 1993; Rosenfeld, 1992; Sabel, 1992). Both the theoretical debates and the policy issues form the context for this article. Specifically, we ask how the characteristics of location distinguish those who adopt one especially important manufacturing technology—computer programmable automation (PA)—from nonadopters. PA is considered by managers and engineers to be a technology that is generally superior and more flexible, because it makes it possible to change a specific tool configuration (to accommodate changes in production requirements) by rewriting the software rather than by physically substituting one piece of equipment for another. PA tools also permit machinists to achieve the finer tolerances required by exacting jobs, such as the shaping of fan blades in aircraft engines, to reduce materials wastage (Edquist and Jacobsson, 1988). We also consider the way external economies of urbanization and localization, as well as leading firms from the same sector—the components of agglomeration—give rise to the generation and acceptance of information that might influence a “focal” business (the unit of analysis) to adopt a new technology after controlling for the influence of intraorganizational (but not explicitly geographic) factors. In the language of urban economic theory, we seek to detect the presence of dynamic agglomeration economies (Glaeser et al., 1992; Henderson, 1988). 5 More specifically, we examine the extent to which the decision to adopt new technology can be attributed to learning effects associated with the size and centrality of the prospective adopter’s local milieu in the national system of such places and of the density of the local industrial sector to which the focal firm belongs. The likelihood of an establishment learning from others may be enhanced by the presence of experienced users and leading firms from the same industry or sector; from firms in other industries; or from trade associations, universities, laboratories, and other specialized information sources located in the proximity. The establishment’s learning—and the ability to act on that information— will also vary by level of organizational resources, scale of production processes, appropriateness of the new technology to the establishment’s core production processes, and sources of information that have nothing to do with geography in itself. For example, an establishment may learn as much from its non-local parent firm and the parent’s network as from nearby institutions. Harrison, Kelley, and Gant 64 Cityscape In nearly all research in economic geo

The idea that small firms create the great majority of jobs in all industrialized economies has become part of the conventional wisdom, repeated by politicians, journalists, business lobbyists, and economic development planners. New or more complete data on the United States, Germany, and Japan, and other information on the OECD countries taken together, shows that this popular characterization is, at best, misleading, and in many respects, incorrect. Industrialized economies may proliferate large numbers of small companies and establishments, but the largest business organizations continue to account for the great majority of jobs, to pay the highest wages and benefits, and to dominate the coordination of production among networks of firms, the control of finance, and the adoption and implementation of new technology. The implication for policy is not that public support for small firms should be abandoned, but rather that a more balanced approach to economic development is needed, one which properly accounts for the continuing central role of the big firms and their strategic partners—even in what some have called this "age of flexibility. "

Abstract Part I of this paper set out the theory of the industrial district and presented the first of three case studies on the Italian districts, questioning the long‐run stability of these social formations qua locally embedded networks of symmetrically powerful small and medium‐sized cooperative competitors, governed by relations of trust and the sharing of information. That first case examined the emergence of lead firms and hierarchical control within the food packaging machinery industry of Emilia‐Romagna. Here, Part II retraces the transformation of the clothing giant, Benetton, from one among many small subcontractors into the apex of a global production and distribution network not unlike such vertical Japanese keiretsu as Toyota. The third case, on the current competitive crisis of the Pratese system of woolen textile production, emphasizes the contingent character of ‘trusting’ relations among small firms, and exposes the contradictions of excessively fragmented production systems during perio...

Much recent scholarship and popular discussion posits a substantial movement of African-American households into the "middle class." Yet over the course of the 1980s, the proportion of individual black wage-earners receiving "annualized" (work experience-adjusted) wages and salaries in excess of about $35,000-three times the poverty line-fell by 22 percent, even as the share of African-Americans earning below the poverty line increased by a fifth. This was true for all age groups, and even for persons within the black community who had completed four or more years of college. The growth of low wage employment was most pronounced for black men between the ages of 25 and 34, among whom the incidence of below-poverty-level employment doubled. Black women aged 35-54 experienced relatively greater progress than any other part of the African-American community, but their gains lagged far behind those of comparable white women. We speculate on possible explanations for these developments, on the basis of which a potential public policy agenda is examined.

According to the theory of industrial districts, a new wave of economic growth is being led in a number of regions in Europe, North America and East Asia by spatially concentrated networks of mostly small and medium sized enterprises, often using flexible production technology and characterized by extensive local interfirm linkages. Does this amount to a re-emergence of the dominance of what urban and regional economists call 'agglomeration economies' over the well-known pressures on business to spatially disperse its operations? Neoclassical economic theorizing from Marshall to Perroux provides one perspective on the contemporary industrial district phenomenon. Another is afforded by Granovetter's more recent elaboration of the ideas of 'embedding', 'under-' and 'over-socialization'. Confronting each of these theoretical approaches with the other leads me to conclude that the industrial district prototypes involve more than simply a reassertion of agglomeration economies. Nor can the industrial districts be satisfactorily explained by Williamsonian concepts about the internalization (within the firm or within the region) of transaction costs. While emphasizing the mutual/shared benefits to individual firms/plants/production units of co-location (such as access to a larger and more specialized local labour pool, and the realization of scale economies in infrastructure provision), both agglomeration theory and transaction cost economics nevertheless follow standard neoclassical logic in conceptualizing local economies as collections of atomistic competitors, formally aware of one another solely through the intermediation of price/cost signals, embodied in contracts of varying completeness. By contrast, contemporary industrial district theory emphasizes the contextual significance of communal non-economic institutions and the importance of relations of 'trust' in reproducing sustained collaboration among economic actors within the districts. Whatever their empirical importance to economic growth and development, their ethical/distributive implications, and to whatever extent they prove over time to be stable institutions, industrial districts are definitely more than 'old wine in new bottles'.