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Do Universities Improve Local Economic Resilience?

Author

Listed:
  • Howard, Greg

    (University of Illinois Urbana-Champaign)

  • Weinstein, Russell

    (University of Illinois Urbana-Champaign)

  • Yang, Yuhao

    (University of Illinois)

Abstract

We use a novel identification strategy to investigate whether regional universities make their local economies more resilient to adverse economic shocks. Our strategy is based on state governments assigning normal schools (to train teachers) and insane asylums to counties between 1830 and 1930. Normal schools later became much larger regional universities while asylum properties mostly continue as small state-owned psychiatric health facilities. Because site selection criteria were similar for these two types of institutions, comparing counties assigned a normal school versus an insane asylum identifies the effect of a regional university. We find that having a regional university roughly offset the negative effects of exposure to manufacturing declines, and we attribute a significant share of this resilience to the resilience of regional public university spending.

Suggested Citation

  • Howard, Greg & Weinstein, Russell & Yang, Yuhao, 2021. "Do Universities Improve Local Economic Resilience?," IZA Discussion Papers 14422, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp14422
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    Cited by:

    1. Sitian Liu & Yichen Su, 2026. "The Geography of Research: The Trade-Off Between Knowledge Production and Access," Papers 2608.15981, arXiv.org.
    2. Gordon H. Hanson & Dani Rodrik & Rohan Sandhu, 2025. "The US Place-Based Policy Supply Chain," NBER Chapters, in: The Economics of Place-Based Policies, pages 147-211, National Bureau of Economic Research, Inc.
    3. Smith, Cory & Kulka, Amrita, 2024. "Population Centers and Coordination: Evidence from County-Seat Wars," CAGE Online Working Paper Series 724, Competitive Advantage in the Global Economy (CAGE).
    4. Kulka, Amrita & Smith, Cory, 2024. "Population Centers and Coordination : Evidence from County-Seat Wars," The Warwick Economics Research Paper Series (TWERPS) 1518, University of Warwick, Department of Economics.
    5. Howard, Greg & Weinstein, Russell, 2026. "Does Training Teachers Locally Affect Teacher Shortages? Evidence from Regional Public Universities," IZA Discussion Papers 18572, IZA Network @ LISER.
    6. Andrews, Michael J. & Marble, William & Russell, Lauren, 2025. "The Long-Run Effects of Colleges on Civic and Political Life," SocArXiv 5v9zw_v1, Center for Open Science.
    7. Luisa Gagliardi,, "undated". "The World’s Rust Belts: The Heterogeneous Effects of Deindustrialization on 1,993 Cities in Six Countries," RFBerlin Discussion Paper Series 2317, ROCKWOOL Foundation Berlin (RFBerlin).
    8. Chang Liu & Kohei Takeda, 2026. "Universities, new tasks, and the rise of services," CEP Discussion Papers dp2211, Centre for Economic Performance, LSE.
    9. Gordon H. Hanson & Enrico Moretti, 2025. "Where Have All the Good Jobs Gone? Changes in the Geography of Work in the US, 1980-2021," NBER Working Papers 33631, National Bureau of Economic Research, Inc.

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    Keywords

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    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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