IDEAS home Printed from https://ideas.repec.org/p/fip/fednsr/332.html
   My bibliography  Save this paper

Human capital and economic activity in urban America

Author

Abstract

We examine the relationship between human capital and economic activity in U.S. metropolitan areas, extending the literature in two ways. First, we utilize new data on metropolitan area GDP to measure economic activity. Results show that a one-percentage-point increase in the proportion of residents with a college degree is associated with about a 2 percent increase in metropolitan area GDP per capita. Second, we develop measures of human capital that reflect the types of knowledge within U.S. metropolitan areas. Regional knowledge stocks related to the provision of producer services and information technology are important determinants of economic vitality.

Suggested Citation

  • Jaison R. Abel & Todd M. Gabe, 2008. "Human capital and economic activity in urban America," Staff Reports 332, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:332
    Note: For a published version of this report, see Jaison R. Abel and Todd M. Gabe, "Human Capital and Economic Activity in Urban America," Regional Studies 45, no. 8 (September 2011): 1079-90.
    as

    Download full text from publisher

    File URL: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr332.pdf
    Download Restriction: no
    File URL: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr332.html
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. McIntosh, Steven & Vignoles, Anna, 2001. "Measuring and Assessing the Impact of Basic Skills on Labour Market Outcomes," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 453-481, July.
    2. Antonio Ciccone & Giovanni Peri, 2006. "Identifying Human-Capital Externalities: Theory with Applications," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(2), pages 381-412.
    3. Ciccone, Antonio, 2002. "Agglomeration effects in Europe," European Economic Review, Elsevier, vol. 46(2), pages 213-227, February.
    4. Berry, Christopher R. & Glaeser, Edward L., 2005. "Divergence of Human Capital Levels across Cities," Working Paper Series rwp05-057, Harvard University, John F. Kennedy School of Government.
    5. Goldin, Claudia & Katz, Lawrence F, 1996. "Technology, Skill, and the Wage Structure: Insights from the Past," American Economic Review, American Economic Association, vol. 86(2), pages 252-257, May.
    6. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
    7. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
    8. Daron Acemoglu & Joshua Angrist, 2001. "How Large Are Human Capital Externalities? Evidence from Compulsory Schooling Laws," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 9-74, National Bureau of Economic Research, Inc.
    9. William D. Nordhaus, 2002. "Productivity Growth and the New Economy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 211-265.
    10. Lucas, Robert E B, 1977. "Hedonic Wage Equations and Psychic Wages in the Returns to Schooling," American Economic Review, American Economic Association, vol. 67(4), pages 549-558, September.
    11. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    12. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    13. David Mcgranahan & Timothy Wojan, 2007. "Recasting the Creative Class to Examine Growth Processes in Rural and Urban Counties," Regional Studies, Taylor & Francis Journals, vol. 41(2), pages 197-216.
    14. repec:hoo:wpaper:e-95-4 is not listed on IDEAS
    15. Darius Lakdawalla & Tomas Philipson, 2007. "Labor Supply and Weight," Journal of Human Resources, University of Wisconsin Press, vol. 42(1).
    16. Edward Ludwig Glaeser & Albert Saiz, 2003. "The rise of the skilled city," Working Papers 04-2, Federal Reserve Bank of Philadelphia.
    17. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    18. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    19. Wheeler, Christopher H., 2006. "Cities and the growth of wages among young workers: Evidence from the NLSY," Journal of Urban Economics, Elsevier, vol. 60(2), pages 162-184, September.
    20. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2008. "Inside the black box of regional development: human capital, the creative class and tolerance," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 615-649, September.
    21. Leo Sveikauskas, 1975. "The Productivity of Cities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 89(3), pages 393-413.
    22. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, July.
    23. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    24. David P. Lindahl & William B. Beyers, 1999. "The Creation of Competitive Advantage by Producer Service Establishments," Economic Geography, Taylor & Francis Journals, vol. 75(1), pages 1-20, January.
    25. Simon, Curtis J., 1998. "Human Capital and Metropolitan Employment Growth," Journal of Urban Economics, Elsevier, vol. 43(2), pages 223-243, March.
    26. Wilbur R. Thompson & Philip R. Thompson, 1987. "National Industries and Local Occupational Strengths: The Cross-Hairs of Targeting," Urban Studies, Urban Studies Journal Limited, vol. 24(6), pages 547-560, December.
    27. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    28. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-342, April.
    29. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
    30. Glaeser, Edward L. & Scheinkman, JoseA. & Shleifer, Andrei, 1995. "Economic growth in a cross-section of cities," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 117-143, August.
    31. Rappaport, Jordan, 2007. "Moving to nice weather," Regional Science and Urban Economics, Elsevier, vol. 37(3), pages 375-398, May.
    32. Mark D. Partridge & Dan S. Rickman, 1999. "Static and Dynamic Externalities, Industry Composition, and State Labor Productivity: A Panel Study of States," Southern Economic Journal, John Wiley & Sons, vol. 66(2), pages 319-335, October.
    33. Andy Dickerson & Francis Green, 2004. "The growth and valuation of computing and other generic skills," Oxford Economic Papers, Oxford University Press, vol. 56(3), pages 371-406, July.
    34. Rauch James E., 1993. "Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities," Journal of Urban Economics, Elsevier, vol. 34(3), pages 380-400, November.
    35. Ingram, Beth F. & Neumann, George R., 2006. "The returns to skill," Labour Economics, Elsevier, vol. 13(1), pages 35-59, February.
    36. Serge Coulombe & Jean‐François Tremblay, 2007. "Skills, Education, And Canadian Provincial Disparity," Journal of Regional Science, Wiley Blackwell, vol. 47(5), pages 965-991, December.
    37. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 281-281.
    38. Christopher R. Berry & Edward L. Glaeser, 2005. "The divergence of human capital levels across cities," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 407-444, August.
    39. Edward L. Glaeser, 2005. "Reinventing Boston: 1630--2003," Journal of Economic Geography, Oxford University Press, vol. 5(2), pages 119-153, April.
    40. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    41. Christopher R. Berry & Edward L. Glaeser, 2005. "The Divergence of Human Capital Levels across Cities," Harvard Institute of Economic Research Working Papers 2091, Harvard - Institute of Economic Research.
    42. Edward L. Glaeser, 2003. "Reinventing Boston: 1640-2003," NBER Working Papers 10166, National Bureau of Economic Research, Inc.
    43. Edward J. Feser, 2003. "What Regions Do Rather than Make: A Proposed Set of Knowledge-based Occupation Clusters," Urban Studies, Urban Studies Journal Limited, vol. 40(10), pages 1937-1958, September.
    44. Christopher R. Berry & Edward L. Glaeser, 2005. "The Divergence of Human Capital Levels Across Cities," NBER Working Papers 11617, National Bureau of Economic Research, Inc.
    45. Mark D. Partridge & Dan S. Rickman, 1999. "Static and Dynamic Externalities, Industry Composition, and State Labor Productivity: A Panel Study of States," Southern Economic Journal, John Wiley & Sons, vol. 66(2), pages 319-335, October.
    46. Bacolod, Marigee & Blum, Bernardo S. & Strange, William C., 2009. "Skills in the city," Journal of Urban Economics, Elsevier, vol. 65(2), pages 136-153, March.
    47. Segal, David, 1976. "Are There Returns to Scale in City Size?," The Review of Economics and Statistics, MIT Press, vol. 58(3), pages 339-350, August.
    48. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Todd M. Gabe, 2009. "Knowledge And Earnings," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 439-457, August.
    2. John V. Winters, 2013. "Human capital externalities and employment differences across metropolitan areas of the USA," Journal of Economic Geography, Oxford University Press, vol. 13(5), pages 799-822, September.
    3. Jaison R. Abel & Todd M. Gabe & Kevin Stolarick, 2014. "Skills across the Urban–Rural Hierarchy," Growth and Change, Wiley Blackwell, vol. 45(4), pages 499-517, December.
    4. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853, Elsevier.
    5. Aurélie LALANNE & Guillaume POUYANNE, 2012. "Ten years of metropolization in economics: a bibliometric approach (In French)," Cahiers du GREThA (2007-2019) 2012-11, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    6. Todd Gabe & Jaison R. Abel, 2011. "Agglomeration of Knowledge," Urban Studies, Urban Studies Journal Limited, vol. 48(7), pages 1353-1371, May.
    7. Daniel Heuermann & Benedikt Halfdanarson & Jens Suedekum, 2010. "Human Capital Externalities and the Urban Wage Premium: Two Literatures and their Interrelations," Urban Studies, Urban Studies Journal Limited, vol. 47(4), pages 749-767, April.
    8. Jaison R. Abel & Ishita Dey & Todd M. Gabe, 2012. "Productivity And The Density Of Human Capital," Journal of Regional Science, Wiley Blackwell, vol. 52(4), pages 562-586, October.
    9. Jos� Lobo & Charlotta Mellander & Kevin Stolarick & Deborah Strumsky, 2014. "The Inventive, the Educated and the Creative: How Do They Affect Metropolitan Productivity?," Industry and Innovation, Taylor & Francis Journals, vol. 21(2), pages 155-177, February.
    10. Südekum, Jens, 2008. "Convergence of the skill composition across German regions," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 148-159, March.
    11. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 155-253.
    12. Winters, John V., 2011. "Human capital, higher education institutions, and quality of life," Regional Science and Urban Economics, Elsevier, vol. 41(5), pages 446-454, September.
    13. Todd Gabe & Jaison Abel & Adrienne Ross & Kevin Stolarick, 2012. "Knowledge in Cities," Urban Studies, Urban Studies Journal Limited, vol. 49(6), pages 1179-1200, May.
    14. Winters, John V., 2014. "STEM graduates, human capital externalities, and wages in the U.S," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 190-198.
    15. Mueller, Normann, 2007. "(Mis-)Understanding Education Externalities," MPRA Paper 5331, University Library of Munich, Germany, revised Mar 2007.
    16. Alberto Dalmazzo & Guido de Blasio, 2005. "Where do human capital externalities end up?," Temi di discussione (Economic working papers) 554, Bank of Italy, Economic Research and International Relations Area.
    17. Winters, John V, 2010. "Human Capital and Population Growth in Non-Metropolitan U.S. Counties: The Importance of College Student Migration," MPRA Paper 25592, University Library of Munich, Germany.
    18. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2016. "Human capital in cities and suburbs," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 57(1), pages 91-123, July.
    19. Richard Florida & Charlotta Mellander & Patrick Adler, 2011. "The Creative Class Paradigm," Chapters, in: David Emanuel Andersson & Åke E. Andersson & Charlotta Mellander (ed.), Handbook of Creative Cities, chapter 3, Edward Elgar Publishing.
    20. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.

    More about this item

    Keywords

    productivity; human capital; new economy; knowledge;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednsr:332. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.