Creative Clusters and Creative Multipliers: Evidence from UK Cities

Abstract

Economic geographers have paid much attention to the cultural and creative industries, both for their propensity to cluster in urban settings, and their potential to drive urban economic development. However, evidence on the latter is surprisingly sparse. In this article, we explore the long-term, causal impacts of the cultural and creative industries on surrounding urban economies. Adapting Moretti’s local multipliers framework, we build a new twenty-year panel of UK cities, using historical instruments to identify causal effects of creative activity on noncreative firms and employment. We find that each creative job generates at least 1.9 nontradable jobs between 1998 and 2018. Prior to 2007, these effects seem more rooted in creative services employees’ local spending than visitors to creative amenities. Given the low numbers of creative jobs in most cities, the overall impact of the creative multiplier is small. On average, the creative sector is responsible for over 16 percent of nontradable job growth in our sample, though impacts will be larger in bigger clusters. We do not find the same effects for workplaces, and we find no causal evidence for spillovers from creative activity to other tradable sectors. In turn, this implies that creative city policies will have partial, uneven local economic impacts. Given extensive urban clusters of creative activity in many countries, our results hold value beyond the UK setting.