Developing capacity in “STEM” (Science, Technology, Engineering and Mathematics) is often considered by policy makers to be a panacea for economic growth. We investigate the potential impacts on the Australian economy of a boost to the STEM sector using the single-region, dynamic Victoria University (VU) model of the Australian economy. We consider two scenarios. In the first, we explore the potential for growth through building up the supply of STEM qualified workers. We find a positive deviation in GDP from the business-as-usual forecast in the medium term. The benefit to the economy of additional STEM qualified workers gradually declines as the supply of these workers grows, until the average wage received by STEM workers, initially more than the national average, falls to below the national average wage. For every additional STEM worker, demographic constraints mean that the economy loses a non-STEM worker – perhaps an artist, a labourer, or a hairdresser. In the long run, this has a negative impact. In the second scenario, we analyse the impact of a boost to demand for exports of STEM commodities. The scenario is set up to reflect a compositional change only, with the demand for non-STEM exports declining so that the terms of trade remains on its business-as-usual forecast trajectory. Over the forecast period of 20 years, we find that this compositional change has a positive impact on economic growth. In addition to the usual CGE framework embedded in the 115-industry VU model, in this project we use two detailed industry by occupation matrices, the first specified in wage bill weights and the second in head counts. For these matrices, 97 occupations are identified. Furthermore, we utilise matrices of occupation by skill in wage bill and head count weights, in which 56 “skills” are identified, comprised of 11 fields of study cross-classified by 5 levels of attainment and a final category for no post-school qualification
