Creative and science-oriented workers and innovation policy in Germany

Stephan Brunow, Antonia Birkeneder, Andrés Rodríguez-Pose 21 July 2018

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"Creative, innovative and open-minded... Discover the city of opportunities". Under this slogan, Berlin launched its branding campaign in 2008. The aim of the campaign was to burnish Germany’s capital image as a colourful, diverse, and tolerant metropolis, capable of attracting both tourists and, more importantly, entrepreneurs. Creativity and innovativeness were, in this way, put right at the top of Berlin’s economic agenda. 

Berlin, however, is no exception among cities trying to build their economic reputation on creativity and innovation. Virtually every city sees creativity and innovation as two sides of the same coin. Aspiring ‘smart cities’ seek more and more to lure a creative class – often by means of improving local amenities and living conditions (Florida 2004, Partridge 2010) – with the objective of climbing up the innovation and economic ladder. More innovative and creative cities are deemed livelier. They are also considered future hubs of wellbeing and growth. Creativity and innovation are thus viewed as pre-conditions for better liveability and progress. Hence, creativity and innovation have become the heart of most smart city and urban development strategies (Florida 2014, Lee and Rodríguez-Pose 2016).

Science-based workers have, in general, attracted less attention. Science-related workers are highly skilled and very often tend to conduct non-routine operations, often resulting in innovation (Hyde et al. 2008). Yet, in contrast to the growing raft of public policies aimed – following Florida (2004) – at attracting creatives, cities and regions have been more tamer in their pursuit of science-based workers, leaving this task to firms. Hence, a question that lingers relates to whether there are more innovation benefits driven by creative individuals – what Marrocu and Paci (2012) call ‘bohemians’ – or by highly skilled professionals conducting creative activities in STEM sectors. There are also questions about which types of cities and territories would benefit most from policies to attract these two types of workers. We explore these questions in a recent paper focusing on Germany (Brunow et al. 2018).

Do ‘bohemians’ and ‘geeks’ mingle in the same places in Germany?

It has been the dominant view in scholarly research that both creatives and STEM workers flock to places that provide the greatest opportunities to develop their talents – i.e. cities. And the larger and denser the city, the better. However, that does not seem to be the case in Germany. Figure 1 maps the regional shares of creative and STEM occupations across German districts at the NUTS 3 level. The top figure portrays the distribution of creative employees. With few exceptions, German creative workers are, indeed, fundamentally urban dwellers. They concentrate in cities – where their proportion exceeds 4% of the total workforce. The bottom figure displays the distribution of STEM workers. German ‘geeks’ are, in contrast, far less urbanite than ‘bohemians’. Science-based workers tend to be located in economically strong regions, such as Bavaria or Baden-Württemberg, either because they prefer them or simply because their continuous presence has made them richer. By contrast, their numbers are considerably lower in predominantly rural regions and/or lagging behind areas in eastern and northern Germany. Large cities such as Berlin and Munich have a high share of creative workers, but their share of STEM employees is rather low in comparison.

Figure 1 Regional distribution of creative and STEM employees on all employees in 2014

a) Creative workers 

b) STEM workers

Source: IAB-ES data based on all regional employees in both groups to provide regionally representativeness.  BKG Geodatenbasis 2015. 

Does this difference between creative and STEM workers affect the geography of innovation in Germany?

How does the different geography of ‘bohemians’ and ‘geeks’ in Germany affect the capacity of German firms to innovate? In our econometric analysiscovering more than 115,000 firm-level observations for the period 1998-2015, innovation in Germany is indeed correlated with the share of both how many creative and STEM workers firms employ. Firms hiring more ‘bohemians’ and more ‘geeks’ are more innovative than those that do not. This relationship is robust to controlling for a host of regional, sectoral, and other establishment related characteristics which also affect firm-level innovation. 

However, the role of creative and STEM workers differs significantly outside the walls of the firm. Whereas creative workers only seem to drive innovation within the boundaries of the firm, STEM workers – on top of having a stronger overall effect on innovation – are capable of expanding innovation capacity to surrounding areas. This is the case in large urban areas, but especially in intermediate but prosperous regions. Overall, ‘geeks’ or STEM workers are much more capable than creatives of making German cities and towns smarter and more innovative. The influence of creatives on innovation is mostly confined only to the largest cities and to the walls of the firms where they work in those large cities. 

Public policies for science workers rather than for creatives

These results provide some food for thought about the public policies that have been implemented to spur innovation in cities and regions in Germany. For local decision makers who aim to make their cities and localities smarter and more innovative, the results of the analysis point in the direction that policies aimed at attracting creative and STEM workers can both yield important returns in the form of innovation. However, and in the face of limited resources, wooing STEM workers can provide greater value for money than focusing exclusively on creative workers. As creative workers mostly propel innovation within the firm, the public gains from putting in place more policies will be more limited. Hence, rather than the public sector subsidising the generation and appropriation of innovation by private firms, it would be for individual firms to augment their efforts to increase their creativity by hiring individuals with the right skills. STEM workers in Germany, by contrast, provide benefits that go beyond the firm and spill over into neighbouring firms within the same city and/or locality and into surrounding areas. STEM workers can also energise innovation capacities well beyond the largest urban agglomerations and play a greater role for innovation and economic dynamism in intermediate and smaller cities. This makes the case for using public resources to attract STEM workers more justifiable, as, after all, they have a greater capacity to make German cities and towns smarter.

References

Brunow, S, A Birkeneder and A Rodríguez-Pose (2018), “Creative and science oriented employees and firm-level innovation”, Cities 78: 27-38.

Florida, R (2004), The rise of the Creative class and how it’s transforming work, leisure, community and everyday life, Basic Books.

Glaeser, E (2005), “Review of Richard Florida’s The rise of the Creative Class”, Regional Science and Urban Economics 35(5): 593–596.

Hyde, J S, S M Lindberg, M C Linn, A B Ellis and C C Williams (2008), “Gender similarities characterize math performance”, Science 321(5888): 494-495.

Lee, N and A Rodríguez-Pose (2016), “Is There Trickle-Down from Tech? Poverty, Employment, and the High-Technology Multiplier in US Cities”, Annals of the American Association of Geographers 106(5):  1114-1134.

Marrocu, E and R Paci (2012), “Education or Creativity: What Matters Most for Economic Performance?”, Economic Geography 88(4):369–401.

Partridge, M D (2010), “The duelling models: NEG vs amenity migration in explaining US engines of growth”, Papers in Regional Science 89(3): 513-536.

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Topics:  Labour markets Productivity and Innovation

Tags:  innovation, STEM, cities, creatives

Professor of Labour Economics, University of Applied Labour Studies

Researcher in Quantitative Economics, Kiel University

Professor of Economic Geography, London School of Economics; Research Fellow, CEPR

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