Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital
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.
|Date of creation:||Sep 2005|
|Date of revision:|
|Publication status:||published as Shapiro, Jesse M. "Smart Cities: Quality Of Life, Productivity, And The Growth Effects Of Human Capital," Review of Economics and Statistics, 2006, v88(2,May), 324-335.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Daron Acemoglu, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 779-804.
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