The Economic Effects of Firm Incentives: Evidence from the California Film Tax Credit Lottery

Jacob Krimmel, Business Economics and Public Policy, The Wharton School, and Benjamin Hyman, Federal Reserve Bank of New York

Abstract: The modern knowledge economy depends crucially on innovation, but adaptation to innovation has been linked to economic ills such as wage inequality, skill polarization, and geographic divergence. Between 2000 and 2016 alone, the U.S. shed approximately 6 million manufacturing jobs largely as a result of increasing pressure from automation and international trade.

Traditional economic theory suggests creative destruction and disruptive innovation should incent workers and firms to adjust in order to share in gains from innovation, productivity, and trade. This paper hopes to shed light on whether displaced workers in today’s knowledge economy are as well-equipped to transition into the most innovative jobs —or “new work” — as those in the past. That is, are there new barriers to entering the innovation sector?

We first plan to characterize the nature of innovative work across several “quality” dimensions, including routine-task-intensity, offshorability, and required skills. Second, we will assess whether the “quality gap” between new and potential entrants differs from previous cohorts. This analysis will provide new insights into how well the labor force writ large is suited for work in the innovation sector. The project has broader implications for future worker retraining programs, skill development initiatives, and place-based policies.

Michelle Eckert is Marketing and Communications Coordinator for the Mack Institute, where she works to engage students, researchers, and corporate partners in opportunities for collaboration. Michelle received her B.A. in Art from Valparaiso University in 2007. Her background includes two AmeriCorps terms of service working to teach mathematics, computer literacy, and job readiness skills to out-of-school youth in Philadelphia, focusing particularly on promoting access to post-secondary education.