Employment impacts of the CHIPS Act

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The $52.7 billion CHIPS and Science Act of August 2022 directly and indirectly created between 30,000 and 45,000 jobs and increased wages in 149 counties with semiconductor manufacturing facilities, according to a paper in the Fall 2025 edition of the Brookings Papers on Economic Activity (BPEA).

“One key message of our study is 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, 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 15,000 and 16,000 jobs in semiconductor production and related equipment and materials manufacturing. They also found indirect employment gains of between 15,000 and 30,000 jobs in upstream input sectors (such as specialized electronics used in fabrication) and non-residential construction. The direct job gains amount to an increase of 110 to 180 jobs per affected county. 

Importantly, the authors note anticipation effects: Employment and wages started increasing a year before the CHIPS Act was signed, with the June 2021 Senate passage of pre-cursor legislation, the United States Innovation and Competition Act (USICA). That convinced semiconductor executives that legislation would eventually be approved.

“It turns out that those beliefs and expectations can move labor markets much earlier than funding approval,” Erten said in an interview with the Brookings Institution.

The authors write that a natural question is whether the sum of the direct and indirect jobs gains they estimated should be considered large or small.

“Given the amounts of money slated to be spent under the act … the employment effects seem modest,” they write. But, they add, “given the highly capital-intensive nature of semiconductor production—it is among the most capital-intensive in U.S. manufacturing—one would not have expected enormous employment effects.”

Moreover, the authors emphasized that many policymakers considered strengthening supply chain resilience and national security as primary justifications for the act before generating employment. “From this perspective, the employment gains seem larger than many expected,” they write.

The authors also noted that short-term impact evaluation is not the only or the best way of assessing the overall success of an industrial policy such as the CHIPS Act.

“The extent to which the act has increased investment in the sector and generated learning by doing within subsidized firms and learning spillovers to other firms may well be more important for growth and hence worker welfare in the long run than short-term job creation,” they write.

Citations

Erten, Bilge, Joseph E. Stiglitz, and Eric Verhoogen. 2025. “Employment Impacts of the CHIPS Act.” Brookings Papers on Economic Activity, Fall: 1–45.

Chodorow-Reich, Gabriel. 2025. “Comment on ‘Employment Impacts of the CHIPS Act’.” Brookings Papers on Economic Activity, Fall: 46–55.

Goldberg, Pinelopi K. 2025. “Comment on ‘Employment Impacts of the CHIPS Act’.” Brookings Papers on Economic Activity, Fall: 55–60.