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Smart Cities: Explaining the Relationship between City Growth and Human Capital


  • Jesse M. Shapiro

    (Harvard University)


From 1940 to 1990, a 10 percent increase in a metrpolitan area’s concentration of college-educated residents was associated with a .6 percent increase in subsequent employment growth. Using data on growth in wages and house values, I attempt to distinguish between explanations for this correlation based on local productivity growth, and explanations based on growth in local consumption amenities. Calibration of a city growth model suggests that roughly two-thirds of the growth effect of human capital is due to enhanced productivity growth, the rest being caused by growth in the quality of life. This contrasts with the standard argument that human capital generates growth in urban areas solely through local knowledge spillovers.

Suggested Citation

  • Jesse M. Shapiro, 2003. "Smart Cities: Explaining the Relationship between City Growth and Human Capital," Urban/Regional 0309001, EconWPA.
  • Handle: RePEc:wpa:wuwpur:0309001
    Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on HP; pages: 24 ; figures: included

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    References listed on IDEAS

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    Cited by:

    1. Guido De Blasio, 2005. "Production Or Consumption? Disentangling The Skill-Agglomeration Connection," ERSA conference papers ersa05p648, European Regional Science Association.
    2. 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.
    3. Ceren Ozgen, 2011. "The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data," Norface Discussion Paper Series 2011013, Norface Research Programme on Migration, Department of Economics, University College London.
    4. Fu, Shihe, 2007. "Smart Cafe Cities: Testing human capital externalities in the Boston metropolitan area," Journal of Urban Economics, Elsevier, vol. 61(1), pages 86-111, January.
    5. Ceren Ozgen & Peter Nijkamp & Jacques Poot, 2012. "Immigration and innovation in European regions," Chapters,in: Migration Impact Assessment, chapter 8, pages 261-298 Edward Elgar Publishing.
    6. Ozgen, Ceren & Nijkamp, Peter & Poot, Jacques, 2011. "The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data," IZA Discussion Papers 6000, Institute for the Study of Labor (IZA).
    7. Terance J. Rephann, 2008. "Community Colleges and Local Economic Development," Working Papers 2008-02, Center for Economic and Policy Studies.
    8. Edward L. Glaeser & Albert Saiz, 2003. "The rise of the skilled city," Working Papers 04-2, Federal Reserve Bank of Philadelphia.
    9. Daniel F. Heuermann, 2009. "Career Networks and Job Matching - Evidence on the Microeconomic Foundations of Human Capital Externalities," IAAEG Discussion Papers until 2011 200901, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    10. Alberto Dalmazzo & Guido De Blasio, 2005. "Where Do Human Capital Externalities End Up To?," ERSA conference papers ersa05p628, European Regional Science Association.
    11. Roberta De Santis & Alessandra Fasano & Nadia Mignolli & Anna Villa, 2015. "A primer on city "smartness" measurement," RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO, FrancoAngeli Editore, vol. 2015(2), pages 34-51.
    12. Shihe Fu, 2005. "What Has Been Capitalized into Property Values: Human Capital, Social Capital, or Cultural Capital?," Working Papers 05-25, Center for Economic Studies, U.S. Census Bureau.
    13. Sotiris Zygiaris, 2013. "Smart City Reference Model: Assisting Planners to Conceptualize the Building of Smart City Innovation Ecosystems," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 4(2), pages 217-231, June.

    More about this item


    city growth; human capital; hedonics;

    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

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