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disappear from the Megalopolis locations. There are indirect effects on the
non-tradable economic sectors of the Megalopolis and the national economy
through wage and price effects and shifting opportunities in labor markets. Income
inequalities, as a consequence, widen further in the last two decades in the Megalo-
polis centers of economic activity.
Spence and Hlatshwayo ( 2011 ) have carried out an analysis of the evolution of
tradable and non-tradable sectors in the US economy and the progress of income
inequalities in the nation during 1990-2007. This part of the paper implements the
Spence-Hlatswayo approach to study the evolution of tradable and non-tradable
sectors and the progress of income distribution in the Megalopolis and component
major metros (for a slightly longer period) during 1990-2011. 10
The largest tradable sector in the Boston metropolitan area was manufacturing
(Fig. 18.7a ). In the recent 22 years (1999-2011) this sector lost about 160,000
employees (45 %) of its total. The average earnings per worker in this sector,
however, climbed up from $80,000 to over $91,000 (in chained dollars) in last
11 years (Fig. 18.8a ).A significant loss of employment accompanied by an upward
shift of average wage in that sector in Boston over a decade replicates the pattern of
increasing income inequalities predicted earlier for regions engaged in globally
organized production and trade. However, two tradable sectors—Professional
services and Finance and Insurance—increased in employment (about 88,000)
and the high average wage per employee—over $140,000 in 2001—climbed up
(in chained dollars) 23 and 13 % respectively in that decade. The overall result is a
drop in tradable sector employment and increasing income inequalities in the
Boston region.
Much of the growth in employment in Boston Metro in these two decades
derives from the non-tradable sectors (Fig. 18.8a ). The Health services sector is
the largest contributor to growth, followed by Government and Retail sectors.
Indeed, the greater part of the employment growth in the Boston metro region by
year 2011 derives from the three non-tradable sectors of Health services, Govern-
ment, and Retail. Health and the Government sectors, have average earnings per
employee of about $70,000, while the earnings per employee in the third employ-
ment growth sector of Retail are low—less than $40,000 (Fig. 18.8b ).
It appears that over the last two decades, employment in the Boston metro region
in the tradable sectors exposed to global competition is declining significantly. This
development combined with a rise in average earnings per remaining employee in
those tradable sectors, leads to rising income inequalities. Further the dominant
(non-tradable) employment growth sectors of Health Care, Government, and Retail
evidence moderate to low earnings per employee. Clearly, evolving trends in
employment
levels and earnings per employee in the globalizing knowledge
10 Spence and Hlatshwayo ( 2011 ) used a methodology developed by Bradford Jensen and Lori
Kletzer. Their approach determined the tradability of an industry based on its geographic concen-
tration—the more concentrated the industry, the higher its tradability (and vice versa). For
example, take retail trade: its ubiquitous geographic presence implies that it is highly non-tradable.
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