Building on The Changing Dynamics of Urban America, this study examines the relative importance of economic and quality of life factors in attracting and retaining college-educated workers. The project, conducted with Christopher Berry, revealed that the dichotomy of "amenities versus jobs" that seems to dominate the current debate on the issue is misleading: the importance of human capital in today's economy means that both workers and firms are attracted to metropolitan areas with high concentrations of human capital, deployed in networks of knowledge-intensive industries, functions, and occupations.
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Grads and Fads
1. Grads and FadsGrads and Fads
The Dynamics ofThe Dynamics of
Human Capital LocationHuman Capital Location
National Meeting
November 5, 2004
Robert Weissbourd, RW Ventures, LLC &
Christopher Berry, University of Chicago
2. AgendaAgenda
Where We Left Off : The Importance of College EducationWhere We Left Off : The Importance of College Education
Patterns of ChangePatterns of Change
Causes of Change: Economics and Amenities?Causes of Change: Economics and Amenities?
What Moves the Young, Educated?What Moves the Young, Educated?
Building HC EconomiesBuilding HC Economies
3. Many Factors Matter
Education is a Leading Driver of Prosperity
Many Factors Matter
Education is a Leading Driver of Prosperity
High School Degree
Age 35-44
Business Services
Sprawl Index
Professional Jobs
College Degree
Exports
Immigration (1980s)
Hispanic Segregation
-0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0
Estimated Effect on Income Growth
(Standardized Regression Coefficient: with 95% Confidence Interval)
4. How to Improve
College Attainment Levels?
How to Improve
College Attainment Levels?
People and Jobs Are IntertwinedPeople and Jobs Are Intertwined
5. Improving College Attainment LevelsImproving College Attainment Levels
Varied Theories Varied Strategies
THEORY 1: It’s the Jobs Attract Firms
Industry Workers Quality of Life
6. Improving College Attainment LevelsImproving College Attainment Levels
Varied Theories Varied Strategies
THEORY 2: It’s the Amenities Improve Q of L to Attract BAs
Knowledge WorkersQuality of Life Industry
7. The Project:
The Dynamics of Human Capital Location
The Project:
The Dynamics of Human Capital Location
Goal: To Understand the Key Drivers of
Increased College Attainment Levels
Project Design
• Using Changing Dynamics Capacity: comprehensive
database and base models for all MSAs;
• Add new datasets, including more quality of life variables,
migration, PUMs data;
• Run econometric models to test the effect of 1990
conditions on college and non-college growth, and on
young and older BA migration from 1990-2000 for all 316
metros;
• Focus on Metropolitan Areas, not Cities.
8. Clarifying the Question:
What Affects Attainment?
Clarifying the Question:
What Affects Attainment?
+New Graduates (Production)
+ Graduates Moving In (Attraction)
- Graduates Moving Out (Non-Retention)
+ Non-Graduates Moving Out
- Non-Graduates Moving In
Factors Affecting Attainment Growth
9. AgendaAgenda
Where We Left Off: The Importance of College EducationWhere We Left Off: The Importance of College Education
Patterns of ChangePatterns of Change
Causes of Change: Economics and Amenities?Causes of Change: Economics and Amenities?
What Moves the Young, Educated?What Moves the Young, Educated?
Building HC EconomiesBuilding HC Economies
10. The American Population is Getting
More Educated at an Astounding Pace
The American Population is Getting
More Educated at an Astounding Pace
100
150
200
250
300
350
GrowthIndex
2003200019971994199119881985198219791976
Year
Population Trends (1975-2003)
Source: CPS and Census Estimates
BAs
Total Adult Population
Number of College Graduates Increased 38% in theNumber of College Graduates Increased 38% in the ’’90s, Representing90s, Representing
7.4 Million New College Graduates in Excess of Population Growth7.4 Million New College Graduates in Excess of Population Growth
11. … But there is Great Variation… But there is Great Variation
051015
Frequency
0 5 10
Attainment Grow th
Median: 3.7
Meced, CAMeced, CA
Yuma, AZYuma, AZ
Boulder, COBoulder, CO
12. Contrary to Popular Belief, the College
Educated Are not Generally Segregating
Contrary to Popular Belief, the College
Educated Are not Generally Segregating
…… But There Are Important Variations Between the Two GroupsBut There Are Important Variations Between the Two Groups
0.511.5
PctChangeinBA+Population,1990-2000
0 .2 .4 .6 .8
Pct Change in Non-BA Population 1990-2000
Correlation: 0.73
Las Vegas, NVLas Vegas, NV
Yuma, AZYuma, AZ
13. Comparative Attainment
Changes Slowly
Comparative Attainment
Changes Slowly
0.2.4.6.8
LogChangeinNumberGrads1990-2000
0 .2 .4 .6 .8
Log Change in Number of Grads 1980-1990
LongLong--Term Strategies NeededTerm Strategies Needed
14. AgendaAgenda
Where We Left Off: The Importance of College EducationWhere We Left Off: The Importance of College Education
Patterns of ChangePatterns of Change
What Moves the Young, Educated?What Moves the Young, Educated?
Causes of Change: Economics and Amenities?Causes of Change: Economics and Amenities?
Building HC EconomiesBuilding HC Economies
15. Exploratory Model Results:
Many Factors Matter
Exploratory Model Results:
Many Factors Matter
Effect on College Educated Population
NegativeNullPositive Null Positive
• Amenities index
• MSA has 3 specializations
• Specialized in business services
• Sales occupations
• Forest, farming, fishing occupation
• Handlers and laborers occupation
• Construction
• Business and repair services
• Export Sales as % Total Income
• % adults with BA
• Eating & drinking est. Per Capita
• Amusement and recreational services
• % foreign born
• MSA size
• Cost of living
• Jobs score
• Recreation score
• Gay index
• Specialized in financial services
• % earnings in financial services
• % earnings in information sector
• Technician and related support occ.
• Administrative support occupation
• Precision production occupation
• Wholesale trade
• Personal services
• Commuting time
• Education score
• Bohemian index
• Finance, insurance real estate
• % earnings in distribution
• % earnings in goods prod/dist.
• % adults w/o High School diploma
• % Hispanic
• % age 25-34
• Crime score
• January mean temperature
• July mean temperature
• Art Score
• Movie Theaters per capita
• Health establishments per capita
• Industry Fragmentation
And numerous others…
• Manufacturing (durable & non-durable)
• Transportation
• Communication and utilities
• Retail trade
• Health services
• Other professional services
• Public administration
• % adults w/ High School diploma
• % age 35-44
• Health score
• Unemployment
• % Of adults w/ advanced degree
• % Of adults w/ some college, no degree
• Ethnic diversity
• Hispanic segregation
• Income inequality
• Places rated total score
• Transportation and material moving
occupation
• Mining
• Membership organizations per capita
• Museums
• Sprawl component 1
• Climate score
• Log heating degree days
Negative
EffectonNonCollegeEducatedPopulation
Note: Table represents results of regressions including only regional dummies as controls,
and does not indicate causal effects.
16. Exploratory Model ResultsExploratory Model Results
EffectonNonCollegeEducatedPopulation Effect on College Educated Population
NegativeNullPositive Negative Null Positive
• Amenities index
• MSA has 3 specializations
• Specialized in business services
• Sales occupations
• Forest, farming, fishing occupation
• Handlers and laborers occupation
• Construction
• Business and repair services
• Export Sales as % Total Income
• % adults with BA
• Eating & drinking est. Per Capita
• Amusement and recreational services
• % foreign born
• MSA size
• Cost of living
• Jobs score
• Recreation score
• Gay index
• Specialized in financial services
• % earnings in financial services
• % earnings in information sector
• Technician and related support occ.
• Administrative support occupation
• Precision production occupation
• Wholesale trade
• Personal services
• Commuting time
• Education score
• Bohemian index
• Finance, insurance real estate
• % earnings in distribution
• % earnings in goods prod/dist.
• % adults w/o High School diploma
• % Hispanic
• % age 25-34
• Crime score
• January mean temperature
• July mean temperature
• Art Score
• Movie Theaters per capita
• Health establishments per capita
• Industry Fragmentation
And numerous others…
• Manufacturing (durable & non-durable)
• Transportation
• Communication and utilities
• Retail trade
• Health services
• Other professional services
• Public administration
• % adults w/ High School diploma
• % age 35-44
• Health score
• Unemployment
• % Of adults w/ advanced degree
• % Of adults w/ some college, no degree
• Ethnic diversity
• Hispanic segregation
• Income inequality
• Places rated total score
• Transportation and material moving
occupation
• Mining
• Membership organizations per capita
• Museums
• Sprawl component 1
• Climate score
• Log heating degree days
•• Specialized in business servicesSpecialized in business services
•• ExportsExports
•• Recreation scoreRecreation score
17. Exploratory Model ResultsExploratory Model Results
EffectonNonCollegeEducatedPopulation Effect on College Educated Population
NegativeNullPositive Negative Null Positive
• Amenities index
• MSA has 3 specializations
• Specialized in business services
• Sales occupations
• Forest, farming, fishing occupation
• Handlers and laborers occupation
• Construction
• Business and repair services
• Export Sales as % Total Income
• % adults with BA
• Eating & drinking est. Per Capita
• Amusement and recreational services
• % foreign born
• MSA size
• Cost of living
• Jobs score
• Recreation score
• Gay index
• Specialized in financial services
• % earnings in financial services
• % earnings in information sector
• Technician and related support occ.
• Administrative support occupation
• Precision production occupation
• Wholesale trade
• Personal services
• Commuting time
• Education score
• Bohemian index
• Finance, insurance real estate
• % earnings in distribution
• % earnings in goods prod/dist.
• % adults w/o High School diploma
• % Hispanic
• % age 25-34
• Crime score
• January mean temperature
• July mean temperature
• Art Score
• Movie Theaters per capita
• Health establishments per capita
• Industry Fragmentation
And numerous others…
• Manufacturing (durable & non-durable)
• Transportation
• Communication and utilities
• Retail trade
• Health services
• Other professional services
• Public administration
• % adults w/ High School diploma
• % age 35-44
• Health score
• Unemployment
• % Of adults w/ advanced degree
• % Of adults w/ some college, no degree
• Ethnic diversity
• Hispanic segregation
• Income inequality
• Places rated total score
• Transportation and material moving
occupation
• Mining
• Membership organizations per capita
• Museums
• Sprawl component 1
• Climate score
• Log heating degree days
•• Specialized in Financial ServicesSpecialized in Financial Services
•• % Earnings in Information Sector% Earnings in Information Sector
•• Education ScoreEducation Score
18. It’s the Economy:
The Effect of Unemployment
It’s the Economy:
The Effect of Unemployment
0510
AttainmentGrowth1990-2000
0 .05 .1 .15
Civilian Unemployment Rate, 1990 [2000 Boundary]
College Graduates Move Away from Places without JobsCollege Graduates Move Away from Places without Jobs
19. It’s the Economy:
The Effect of Income
It’s the Economy:
The Effect of Income
0510
AttainmentGrowth(1990-2000)
5000 10000 15000 20000 25000
Per Capita Income 1990
And Go to Places with High IncomeAnd Go to Places with High Income
20. It’s the Knowledge Economy:
Knowledge Industries Attract BAs
It’s the Knowledge Economy:
Knowledge Industries Attract BAs
0510
AttainmentGrowth(1990-2000)
0 .05 .1 .15
Share workers in Finance, Insurance, and Real Estate
0510
AttainmentGrowth(1990-2000)
.1 .2 .3 .4 .5
Information Sector as % Total Earnings
Finance, Insurance, and Real EstateFinance, Insurance, and Real Estate Information SectorInformation Sector
0510
AttainmentGrowth(1990-2000)
.02 .03 .04 .05 .06 .07
% Employed In Business and Repair Services
0510
AttainmentGrowth(1990-2000)
0 .05 .1 .15 .2 .25
% Employment In Manufacturing
ManufacturingManufacturingBusiness ServicesBusiness Services
21. It’s the Knowledge Economy:
High Human Capital Occupations Attract BAs
It’s the Knowledge Economy:
High Human Capital Occupations Attract BAs
-0.01 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80
Exec, admin, and
managerial
Professional Specialty
Transportation and
Material Moving*
Handlers and Laborers*
Standardized Regression Coefficients: 1990 Occupation and 1990-2000 Attainment Growth
Regression includes unemployment, wages, amenity index, and regional dummies as controls.
* Not Statistically Significant
22. What About Amenities?What About Amenities?
• Amenities (broadly defined) have a significant
effect on changes in educational attainment
• Amenities include a broad range of characteristics,
from highways to coffee bars
• Amenities include things we can change, such as
parks, and things we can’t change, such as
weather
• Many consumption amenities (i.e. quality of life
factors) commonly perceived as important do not
matter, or matter less than people think
• Amenities (broadly defined) have a significant
effect on changes in educational attainment
• Amenities include a broad range of characteristics,
from highways to coffee bars
• Amenities include things we can change, such as
parks, and things we can’t change, such as
weather
• Many consumption amenities (i.e. quality of life
factors) commonly perceived as important do not
matter, or matter less than people think
23. It’s Not Cultural AmenitiesIt’s Not Cultural Amenities
Factor
College
Graduates
Non College
Graduates
Movie Theaters 0 0
Art Score 0 0
Gay Index 0 0
Bars and
Restaurants + +
Weather + ++
The table reports the results of regression models
including unemployment, wages, amenity index, and regional dummies as controls.
24. Quality of Life does Not Matter
as Much as Economic Factors
Quality of Life does Not Matter
as Much as Economic Factors
-0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3
Bars and
Restaurants*
FIREIndustry
Unemployment
Standardized Regression Coefficients: 1990 Factors and 1990-2000 Attainment Growth
Regressions Include unemployment, wages, amenity index, and regional dummies as controls
* Not Statistically Significant
Good Weather and Night Life are Not NearlyGood Weather and Night Life are Not Nearly
as Important to College Graduates as Employmentas Important to College Graduates as Employment
25. AgendaAgenda
Where We Left Off: The Importance of College EducationWhere We Left Off: The Importance of College Education
Patterns of ChangePatterns of Change
Causes of Change: Economics and Amenities?Causes of Change: Economics and Amenities?
What Moves the Young, Educated?What Moves the Young, Educated?
Building HC EconomiesBuilding HC Economies
26. Why the Young?Why the Young?Why the Young?
Percent Movers 25 to 39Percent Movers 25 to 39
by Education and Marital Statusby Education and Marital StatusPercent Movers by Age GroupPercent Movers by Age Group
5 to 14 15 to 24 25 to 39 40 to 64 Over 65
0
10
20 30
20
10
0
Single,
College
Married,
College
Single, No
College
Married, No
College
Source: Census Bureau Special Report, Movers from Out of State OSource: Census Bureau Special Report, Movers from Out of State Onlynly
Younger Age Groups Are More Mobile, and BAs Move More than NonYounger Age Groups Are More Mobile, and BAs Move More than Non--BAsBAs
27. Migration Patterns Vary Little by AgeMigration Patterns Vary Little by Age
-600-400-2000200400
YoungSingleCollegeGrads
-400 -200 0 200 400
All Other College Grads
San Luis Obispo, CASan Luis Obispo, CA
Punta Gorda, FLPunta Gorda, FL
Fort Meyers, FLFort Meyers, FL
Naples, FLNaples, FL
Las Vegas, NVLas Vegas, NV
Charlotte, NCCharlotte, NC
Atlanta, GAAtlanta, GA
Anchorage, AKAnchorage, AK
Povo, UTPovo, UT
Bryan, TXBryan, TX
Both Groups Have Similar Migration PatternsBoth Groups Have Similar Migration Patterns
28. Age Effects Don’t Matter MuchAge Effects Don’t Matter Much
General pattern is similarity, not difference, in
migration models of young, single graduates
relative to other grads.
•College town effects are especially strong for young
grads
•Young grads migrate to larger MSAs
•Young grads migrate more to MSAs with high
attainment
•Young grads are more likely to move to or stay in
MSAs with non-white population
•Young grads are more likely to leave MSAs with
manufacturing/production jobs
General pattern is similarity, not difference, inGeneral pattern is similarity, not difference, in
migration models of young, single graduatesmigration models of young, single graduates
relative to other grads.relative to other grads.
•College town effects are especially strong for young
grads
•Young grads migrate to larger MSAs
•Young grads migrate more to MSAs with high
attainment
•Young grads are more likely to move to or stay in
MSAs with non-white population
•Young grads are more likely to leave MSAs with
manufacturing/production jobs
29. AgendaAgenda
Where We Left Off: The Importance of College EducationWhere We Left Off: The Importance of College Education
Patterns of ChangePatterns of Change
Causes of Change: Economics and Amenities?Causes of Change: Economics and Amenities?
What Moves the Young, Educated?What Moves the Young, Educated?
Building HC EconomiesBuilding HC Economies
30. Education Must Be Deployed To
Increase Productivity
Education Must Be Deployed To
Increase Productivity
31. Education Alone is not EnoughEducation Alone is not Enough
Wage Growth
0 0.1 0.2 0.3 0.4 0.5
Santa Fe, NM
Lawrence, KS
San Francisco, CA 37%
6%
7%
% Earnings in Government
College Enrollment as % Total Population
% BA or Higher 1990
What People Do Is as Important as What They KnowWhat People Do Is as Important as What They Know
32. The Economics of Human CapitalThe Economics of Human Capital
• Education matters only as a component of Human
Capital -- the level of skill and expertise embedded
in the labor force
• Human Capital is more important to productivity
than ever in the knowledge economy
• Human Capital is more productive when
concentrated, such as in cities, and in knowledge
occupations or functions
• Both workers and firms are attracted by pools of
human capital deployed in knowledge job
networks and economic functions
• Education matters only as a component of Human
Capital -- the level of skill and expertise embedded
in the labor force
• Human Capital is more important to productivity
than ever in the knowledge economy
• Human Capital is more productive when
concentrated, such as in cities, and in knowledge
occupations or functions
• Both workers and firms are attracted by pools of
human capital deployed in knowledge job
networks and economic functions
33. It’s not the Chicken or the Egg –
It’s the Incubator
It’s not the Chicken or the Egg –
It’s the Incubator
IT’S ABOUT PRODUCTIVITY
Knowledge Workers Active Human Capital Industry
High HC
Occupations
Productive
Industries
Knowledge
Functions
To Attract Knowledge Workers, Build anTo Attract Knowledge Workers, Build an
Economy Characterized by HighEconomy Characterized by High--Human CapitalHuman Capital
Occupations and FunctionsOccupations and Functions
34. Policy ImplicationsPolicy Implications
1.1. Take Care of the BasicsTake Care of the Basics
• Increase Human Capital through Education
and Training
• Support Innovation
• Invest in Knowledge Institutions
2.2. Target Local OpportunitiesTarget Local Opportunities
• Identify Existing Occupational, Functional Concentrations or
Opportunities
• Target High Human Capital Sectors and Occupations that are likely
to Grow and Offer Cross-fertilization Opportunities
3.3. Build a HumanBuild a Human--Capital Intensive EconomyCapital Intensive Economy
• Support Business Formation in Key Sectors and Functions
• Create Rich Networks of People and Jobs
• Invest in Amenities and Quality of Life to Complement Your
Strategy, not to Supplant It
35. Examples of Programs to Strengthen
Human Capital Intensive Economy
Examples of Programs to Strengthen
Human Capital Intensive Economy
(1) Support business formation in key sectors and functions:
Innovation and Commercialization of Knowledge: technical assistance programs,
cooperative R&D centers, technology transfer.
Entrepreneurship: entrepreneurship education in schools and universities,
business incubators, efficient regulatory and licensing process.
Targeted Access to Capital: ensure appropriate types of capital to support
stages of targeted business development (seed money, venture capital,
mezzanine financing, SBA loans).
(2) Create Rich Networks of People and Jobs:
Industry Research Centers: support university-industry partnerships (e.g.
Research Triangle Park); invest in industry innovation initiatives (e.g. Innovation
@ Scale project in RI; Bay Area Science and Innovation Consortium)
Professional Organizations: support and strengthen already existing networks;
create “knowledge hubs” to share learning and best practices.
Job Market Connections: Set up targeted internship programs, aimed particularly
at students in fields that city seeks to strengthen (e.g. KIP in Philadelphia,
Summer of the Cuyahoga program in Cleveland).
(1) Support business formation in key sectors and functions:
Innovation and Commercialization of Knowledge: technical assistance programs,
cooperative R&D centers, technology transfer.
Entrepreneurship: entrepreneurship education in schools and universities,
business incubators, efficient regulatory and licensing process.
Targeted Access to Capital: ensure appropriate types of capital to support
stages of targeted business development (seed money, venture capital,
mezzanine financing, SBA loans).
(2) Create Rich Networks of People and Jobs:
Industry Research Centers: support university-industry partnerships (e.g.
Research Triangle Park); invest in industry innovation initiatives (e.g. Innovation
@ Scale project in RI; Bay Area Science and Innovation Consortium)
Professional Organizations: support and strengthen already existing networks;
create “knowledge hubs” to share learning and best practices.
Job Market Connections: Set up targeted internship programs, aimed particularly
at students in fields that city seeks to strengthen (e.g. KIP in Philadelphia,
Summer of the Cuyahoga program in Cleveland).
36. Practical First Steps:
Do You Have Knowlege Industries?
Practical First Steps:
Do You Have Knowlege Industries?
.1.2.3.4.5
PctAdultswithBAorHigher(2000)
.1 .2 .3 .4 .5
Predicted Values Based on Industry Composition
Indianapolis, INIndianapolis, IN
Milwaukee, WIMilwaukee, WI
Richmond, VARichmond, VA
Chicago, ILChicago, IL
Columbus, OHColumbus, OH
Providence, RIProvidence, RI
San Antonio, TXSan Antonio, TX
Toledo, OHToledo, OH
Industrial Composition Predicts AttainmentIndustrial Composition Predicts Attainment
37. It’s Not Just Where You WorkIt’s Not Just Where You Work
-.1-.050.05.1
Residuals
.1 .2 .3 .4 .5
Predicted Values Based on Industry Composition
Indianapolis, INIndianapolis, IN
Milwaukee, WIMilwaukee, WI
Richmond, VARichmond, VA
Chicago, ILChicago, IL
Columbus, OHColumbus, OH
Providence, RIProvidence, RI
San Antonio, TXSan Antonio, TX
Toledo, OHToledo, OH
San Jose, CASan Jose, CA
Over or Under Performance Compared to PredictedOver or Under Performance Compared to Predicted
38. … It’s What You Do… It’s What You Do
0%
5%
10%
15%
20%
25%
30%
Information Professional and
Scientific Services
San Jose - Industries
San Jose National Average
0%
5%
10%
15%
20%
25%
30%
Management Professional Computer and
Mathematical
San Jose - Occupations
San Jose National Average
39. Example: Kansas CityExample: Kansas City
Functions
• Business Services
• Headquarters
• Conventions and business organizations
• Market research and advertising
Industries
• Administrative and Support Services
• Management, Technical, and Scientific
Services
• Professional Services
Occupations
• Accountants, Analysts, HR Professionals
• Computer, Engineering and Mathematical
• Management
• Office and Administrative Support
40. Take-AwaysTake-Aways
• “It’s the Economy, Stupid”
• It’s the Knowledge Economy
• Amenities Matter at the Margin
• Find the Nexus of Knowledge
Industries, Functions, and Occupations
•• ““ItIt’’s the Economy, Stupids the Economy, Stupid””
•• ItIt’’s thes the KnowledgeKnowledge EconomyEconomy
•• Amenities Matter at the MarginAmenities Matter at the Margin
•• Find the Nexus of KnowledgeFind the Nexus of Knowledge
Industries, Functions, and OccupationsIndustries, Functions, and Occupations
ItIt’’s not the Chicken or the Egg:s not the Chicken or the Egg:
ItIt’’s a Human Capitals a Human Capital--Based Economic StrategyBased Economic Strategy
41. Grads and FadsGrads and Fads
The Dynamics ofThe Dynamics of
Human Capital LocationHuman Capital Location
DISCUSSION
by: Robert Weissbourd, RW Ventures &
Christopher Berry, Harvard University