The $52.7 billion CHIPS and Science Act of August 2022 directly and indirectly created between 42,465 and 54,385 jobs (more than many expected) and increased wages in 149 counties with semiconductor manufacturing facilities, according to a paper to be discussed at the Brookings Papers on Economic Activity (BPEA) conference on September 25.
“Our findings suggest that industrial policies can deliver measurable employment benefits in targeted strategic sectors, even in the short run,” write the authors, Bilge Erten of Northeastern University and Joseph E. Stiglitz and Eric Verhoogen of Columbia University.
To distinguish the employment effects of the CHIPS act from other large spending commitments, such as those in the Inflation Reduction Act signed into law a week later, the authors use a “differences-in-differences” approach. They compare quarterly employment and wage data from the Bureau of Labor Statistics and U.S. Census Bureau through the end of 2024 in counties with pre-existing semiconductor production facilities to counties with other pre-existing high-tech employment but no semiconductor producers.
“The idea of differences-in-differences is that their trends would be similar in the absence of the CHIPS act. So, we looked at deviations of the semiconductor counties from the trend in high-tech non-semiconductor counties,” Verhoogen said in an interview with the Brookings Institution.
Their estimates suggest a direct increase of between 14,900 and 20,860 jobs in...
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