This paper examines the impact of high-tech clusters on labor market inequalities, focusing on a place-based industrial policy known as ”Made in China 2025.” This policy aimed to attract high-tech firms to industrial clusters in designated ”pilot” cities by providing unprecedented fiscal incentives. By utilizing the staggered rollout of these pilot cities and representative online job posting data, we conduct an event-study analysis to explore the causal effects of high-tech clusters on labor demand across different occupations and regions. Our findings indicate that the policy resulted in a significant increase in job openings and wages in the pilot cities, but it also led to a widening wage gap between routine and non-routine occupations. In neighboring areas of the pilot cities, job openings and wages initially decreased in the short term but later recovered, indicating evidence of positive spillover effects from the high-tech clusters. Additionally, we show that the development of high-tech clusters has caused a reduction in the net income of workers in routine jobs, as it significantly raised housing costs in the pilot cities. These results suggest that policymakers should be cautious about the varying welfare effects when developing high-tech clusters.
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