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Education, Municipal

Do colleges and universities increase their region’s human capital?

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Retaining college graduates is widely thought to be an important part of how cities and regions maintain their competitive edge — the theory is that more educated workers means greater human capital, which leads to economic growth. Although data has been compiled on educational attainment by many states and regions, there has not been sustained research on the impact that colleges and universities have.

A 2011 study from the Federal Reserve Bank of New York published in the Journal of Economic Geography, “Do Colleges and Universities Increase Their Region’s Human Capital?” utilizes Department of Education data from 1999 to 2000 and 2006 on the volume of university degrees earned in metropolitan areas, National Science Foundation data on academic research and development expenditures over the same periods. It also uses Census and American Community Survey data to estimate human capital levels.

Key findings include:

  • In 2006, the metropolitan area that spent the most on academic research and development was New York, with roughly $2.7 billion in expenditures, followed by Baltimore, Los Angeles and Boston.
  • The New York metropolitan area produced the most degrees, with 143,971 awarded in 2006, followed by Los Angeles, Chicago and Boston, respectively.
  • There is only a small positive relationship between the level of human capital in a metropolitan area and the volume of degrees of produced. This may result from the “key role migration plays in redistributing human capital across space.”
  • Metropolitan areas with higher levels of degree production tend to have higher numbers of people in human capital intensive occupations. In particular, the share of people working in the life, physical and social sciences in a metropolitan area is positively associated with degree production. This is also true of metropolitan areas that spend significant amounts of money on research and development.
  • On average, areas with high volumes of degree productions have lower shares of people working in manufacturing and goods distribution industries, along with other low human capital occupations.
  • Metropolitan areas which focused primarily on degree production as opposed to research and development tended to have more workers in “both ‘high’ and ‘low’ human capital occupations, but smaller shares of many of the most human capital-intensive occupations.”
  • Some of the most highly skilled professional fields, such as engineering, and business, have a negative relationship with degree production but a positive relationship with specialized degree production. “These patterns suggest that access to field-specific human capital and proximity to specialized knowledge is important for these groups, as opposed to access to generic pools of human capital.”
  • The findings suggest that “policies aimed at increasing a region’s human capital through the expansion of local colleges and universities will be most effective if they target both the supply and demand sides of local labor markets, as doing so can help to retain and attract human capital.”

The authors note that, because of the small positive relationship between degree production and human capital in a region, policy makers “focusing on the generic expansion and retention of local graduates” may have limited success increasing human capital. But knowledge spillovers from academic research and development may have a positive impact on the local economy by increasing the demand for skilled labor. Additionally, the types of degrees produced in a metropolitan area will affect the level of human capital present in the area; for example, the presence of more degrees in the sciences is associated with more science-oriented, high human capital workers.

Tags: science, small business, entrepreneurship, municipal

    Writer: | Last updated: June 11, 2012

    Citation: Abel, Jaison R.; Deitz, Richard. “Do Colleges and Universities Increase Their Region's Human Capital?” Journal of Economic Geography, October 2009, No. 401.

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    Media analysis

    Read the issue-related New York Times article titled "A Gap in College Graduates Leaves Some Cities Behind."

    1. What key insights from the article and study should reporters be aware of as they cover economic development issues?

    Study analysis

    Read the study titled “Do Colleges and Universities Increase Their Region's Human Capital?”

    1. What are the study's key technical term(s)? Which ones need to be put into language a lay audience can understand?
    2. Do the study’s authors put the research into context and show how they are advancing the state of knowledge about the subject? If so, what did the previous research indicate?
    3. What is the study’s research method? If there are statistical results, how did the scholars arrive at them?
    4. Evaluate the study's limitations. (For example, are there weaknesses in the study's data or research design?)
    5. How could the findings be misreported or misinterpreted by a reporter? In other words, what are the difficulties in conveying the data accurately? Give an example of a faulty headline or story lead.

    Newswriting and digital reporting assignments

    1. Write a lead, headline or nut graph based on the study.
    2. Spend 60 minutes exploring the issue by accessing sources of information other than the study. Write a lead (or headline or nut graph) based on the study but informed by the new information. Does the new information significantly change what one would write based on the study alone?
    3. Compose two Twitter messages of 140 characters or fewer accurately conveying the study’s findings to a general audience. Make sure to use appropriate hashtags.
    4. Choose several key quotations from the study and show how they would be set up and used in a brief blog post.
    5. Map out the structure for a 60-second video segment about the study. What combination of study findings and visual aids could be used?
    6. Find pictures and graphics that might run with a story about the study. If appropriate, also find two related videos to embed in an online posting. Be sure to evaluate the credibility and appropriateness of any materials you would aggregate and repurpose.

    Class discussion questions

    1. What is the study’s most important finding?
    2. Would members of the public intuitively understand the study’s findings? If not, what would be the most effective way to relate them?
    3. What kinds of knowledgeable sources you would interview to report the study in context?
    4. How could the study be “localized” and shown to have community implications?
    5. How might the study be explained through the stories of representative individuals? What kinds of people might a reporter feature to make such a story about the study come alive?
    6. What sorts of stories might be generated out of secondary information or ideas discussed in the study?