Do Jobs Follow People or Do People Follow Jobs?

A case for the latter.
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A case for the latter.
The downtown Las Vegas skyline looking south, with the Las Vegas Valley in the background. (PHOTO: BPORTER28/WIKIMEDIA COMMONS)

The downtown Las Vegas skyline looking south, with the Las Vegas Valley in the background. (PHOTO: BPORTER28/WIKIMEDIA COMMONS)

People follow jobs. Economic geographer Michael Storper answered my blog post title question during a lecture about his new bookKeys to the City: How Economics, Institutions, Social Interaction and Politics Shape Development. Storper argues that those who study cities fall into one or the other camp. Edward Glaeser and Richard Florida epitomize the jobs-follow-people paradigm. From the people-follow-jobs side of the fence are Enrico Moretti and Timothy Noah. The former school of thought worries about how a place attracts and cultivates talent. The latter anguishes about geographic immobility and people living where the [good] jobs aren't.

Strategies for urban planning, economic development, and workforce development also fall into one or the other category. For example, luring artists to a blighted urban neighborhood subscribes to the theory of jobs follow people. Offering incentives for a business to move from California to Texas banks on people following jobs. In a given region, both approaches are in play. Whatever the case, no small potatoes that Storper comes down clearly in favor of people follow jobs. I agree with him.

Currently, jobs-follow-people holds sway with urban boosters and economic development professionals. Tony Hsieh is building just such a temple in Las Vegas. Influencing his revitalization vision:

Inspired by Edward Glaeser’s Triumph of the City, an iconoclastic history of cities that shatters commonly-held misconceptions about urban life, Hsieh is determined not to repeat the past mistakes of city planning, “We’re very anti-topdown master planning which is how a lot of urban revitalization projects are done and instead we focus much more on the entrepreneur and what the community wants.”

Emphasis added. The debate about cities often falls into false dichotomies such as urban versus suburban or top-down versus bottom-up planning. None of that matters under Team Glaeser. The die is already cast as jobs-follow-people.

Underlying this non-debate (that should be a debate) is the Rust Belt fable. Why did everyone leave? Failure of place:

A city that seeps population over time invariably has deeper problems driving its demographic change, like poor school districts that can't keep young families, or weak job prospects for its college grads. A county that attracts new residents, on the other hand -- maybe young people in particular, or retirees -- likely has the right amenities to lure them. Maybe a certain job sector. Or golf course communities.

In this way, we can divine some of the fortunes of different corners of the country simply by watching how Americans move around over the years. Each year, about 10 million Americans relocate to a new county. Map all those moves from one Census to another, across decades, and by race and age demographics, and you can see the Great Migration of blacks from the South, white flight to northern suburbs, the hollowing out of Rust Belt cities and the rise of the Sun Belt.

Emphasis added. That's Glaeser-Florida and it colors the entire article. Take the same data and maps, use Moretti-Noah and a different version of events appears:

At the turn of the 20th century, the metropolitan area of Detroit, Michigan, in many ways resembled the Silicon Valley of the last few decades. Growth of the nascent auto industry was explosive, with 500 firms entering before 1915 (Klepper 2002). Ten years prior, the Michigan legislature in 1905 had passed statute 445.761 (bearing resemblance to California’s prohibition): “All agreements and contracts by which any person...agrees not to engage in any avocation or employment...are hereby declared to be against public policy and illegal and void.” This law governed non-compete enforcement until March 27, 1985, when the Michigan Antitrust Reform Act (MARA) repealed section 445 and with it the prohibition on enforcing non-compete agreements. ...

... This work exploited an inadvertent 1985 change in Michigan non-compete law as a natural experiment, comparing the mobility of Michigan inventors relative to similar inventors in other states that did not change their enforcement. Providing direct evidence for the arguments of Gilson (1999) and Stuart and Sorenson (2003), we found a strong decrease in average Michigan mobility once non-competes began to be enforced. By exploiting a natural experiment in a differences-in-differences study design, this study provides stronger identification of the influence of non-competes on mobility (Fallick et al. 2006). Furthermore, the analysis distinguishes the greater effect of non-competes for inventors with firm-specific or technology-specific skills who are not widely marketable beyond direct competitors. The credibly exogenous source of variation in mobility established in this paper can be exploited to extend work on the implications of interorganizational worker mobility.

To summarize, talent retention causes brain drain. Innovation didn't move from Detroit to Silicon Valley because of some failure of place or lousy climate. Talent and innovation clustered in San Francisco-San Jose because California won't enforce non-compete agreements while Michigan and Massachusetts will. Michigan is an anti-talent, pro-amenities state. Detroit is married to jobs-follow-people as a way out of its mess. Is that the best course of action? Michael Storper indicates that it isn't:

My role as a researcher and theorist is to be faithful to theory and evidence and to bring it together in a way that helps people to think about change. It should also help them to see through ideas that do not hold water, and there are alot of them in the urban and regional development field. By this, I mean ideas that sometimes seem intuitively appealing but that turn out to be wrong when faced with the evidence. So my goal with this book, as with all my teaching, is to try and inspire a rigorous, critical perspective on urban development, so that practitioners can be better equipped to focus their efforts on the right tasks.

I highly recommend Storper's book just for the literature review of the best thinking about why some cities thrive and others struggle to survive. As I labor through it myself, I'll post reactions. I'm hoping a robust conversation will evolve around it.