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Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital

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Jesse M. Shapiro

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Abstract

From 1940 to 1990, a 10 percent increase in a metropolitan area's concentration of college-educated residents was associated with a .8 percent increase in subsequent employment growth. Instrumental variables estimates support a causal relationship between college graduates and employment growth, but show no evidence of an effect of high school graduates. Using data on growth in wages, rents and house values, I calibrate a neoclassical city growth model and find that roughly 60 percent of the employment growth effect of college graduates is due to enhanced productivity growth, the rest being caused by growth in the quality of life. This finding contrasts with the common argument that human capital generates employment growth in urban areas solely through changes in productivity.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11615.

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Date of creation: Sep 2005
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Handle: RePEc:nbr:nberwo:11615

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Find related papers by JEL classification:
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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  1. Acemoglu, Daron, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 779-804, August. [Downloadable!] (restricted)
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  1. Florida, Richard & Mellander, Charlotta & Qian, Haifeng, 2008. "Creative China? The University, Tolerance and Talent in Chinese Regional Development," Working Paper Series in Economics and Institutions of Innovation 145, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]
  2. Mellander, Charlotta & Florida, Richard, 2007. "The Creative Class or Human Capital? - explaining regional development in Sweden," Working Paper Series in Economics and Institutions of Innovation 79, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]
  3. Beckstead, Desmond & Brown, W. Mark & Newbold, Bruce, 2008. "Les villes et la croissance : croissance du capital humain migratoire et in situ," L'économie canadienne en transition 2008019f, Statistics Canada, Division de l'analyse économique. [Downloadable!]
  4. Steven Poelhekke, 2006. "Do Amenities and Diversity Encourage City Growth? A Link Through Skilled Labor," Economics Working Papers ECO2006/10, European University Institute. [Downloadable!]
  5. de la Garza, Adrián G., 2008. "Do smart cities grow faster?," MPRA Paper 10881, University Library of Munich, Germany. [Downloadable!]
  6. Alberto Dalmazzo & Guido Blasio, 2007. "Production and consumption externalities of human capital: an empirical study for Italy," Journal of Population Economics, Springer, vol. 20(2), pages 359-382, April. [Downloadable!] (restricted)
  7. Timothy J. Bartik & George Erickcek, 2007. "Higher Education, the Health Care Industry, and Metropolitan Regional Economic Development: What Can “Eds & Meds” Do for the Economic Fortunes of a Metro Area’s Residents?," Staff Working Papers 08-140, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  8. Beckstead, Desmond & Brown, W. Mark & Newbold, Bruce, 2008. "Cities and Growth: In Situ Versus Migratory Human Capital Growth," The Canadian Economy in Transition 2008019e, Statistics Canada, Economic Analysis Division. [Downloadable!]
  9. Beckstead, Desmond & Brown, W. Mark & Gellatly, Guy, 2008. "Cities and Growth: The Left Brain of North American Cities: Scientists and Engineers and Urban Growth," The Canadian Economy in Transition 2008017e, Statistics Canada, Economic Analysis Division. [Downloadable!]
  10. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," NBER Working Papers 14373, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Joseph Gyourko & Christopher Mayer & Todd Sinai, 2006. "Superstar Cities," NBER Working Papers 12355, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. David Y. Albouy, 2008. "The Unequal Geographic Burden of Federal Taxation," NBER Working Papers 13995, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Beckstead, Desmond & Brown, W. Mark & Gellatly, Guy, 2008. "Villes et croissance : le cerveau gauche des villes nord-américaines : scientifiques et ingénieurs et croissance urbaine," L'économie canadienne en transition 2008017f, Statistics Canada, Division de l'analyse économique. [Downloadable!]
  14. Bianca Biagi & D. Lambiri & V. Royuela, 2006. "Quality of Life in the Economic and Urban Economic Literature," Working Paper CRENoS 200610, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
  15. Stepán Jurajda & Katherine Terrell, 2007. "Regional Unemployment and Human Capital in Transition Economies," IZA Discussion Papers 3176, Institute for the Study of Labor (IZA). [Downloadable!]
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  16. Alberto Dalmazzo & Guido De Blasio, 2007. "Skill-Biased Agglomeration Effects and Amenities: Theory with an Application to Italian Cities," Department of Economics University of Siena 503, Department of Economics, University of Siena. [Downloadable!]
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