The creative industries and urban economic growth in the UK

Policy makers in the UK see the creative industries as a key sector for regenerating inner cities and stimulating flagging urban economies. The creative industries may raise productivity through spillovers or as part of the production processes of other firms. Creative firms may squeeze out other, less productive sectors. Highly skilled workers may be attracted to creative cities. Or the creative industries may thrive in growing cities with strong demand for their products. This paper tests the link between the creative industries and wage and employment growth in a panel of travel-to-work areas from 2003 to 2008. The results suggest the creative industries drive both wage and employment growth in other sectors. However, when only urban areas are considered the creative industries drive wage growth but do not increase employment. These findings are consistent with the idea that the creative industries help other sectors grow, but may squeeze out declining industries from urban areas.