Migration as a Measure of Economic Health

What explains the differences between Pittsburgh and Asheville, both of which posted similarly strong gains in BA attainment rate over the same period?
Author:
Publish date:
Pittsburgh, Pennsylvania. (Photo: Natalia Bratslavsky/Shutterstock)

Pittsburgh, Pennsylvania. (Photo: Natalia Bratslavsky/Shutterstock)

"If the competition at hand is attracting highly educated young people, Dallas isn’t doing so hot." Would your community like to know how to attract and retain more college-educated millennials? I bet it does. If I wanted to make a mountain of money as a geographer for hire, I would claim that I know how to get the best and brightest young adults to cluster in a community. My first client, Cincinnati, Ohio:

A recent report from the think tank City Observatory shows our region losing the battle to keep our fair share of home-grown college grads, let alone attract others. Millennial grads are highly mobile. They pack up their cars and head off to for [sic] more appealing urban environs, and to towns you might not expect.

I'll start off with the paradox. Millennial grads are highly mobile. How can Cincinnati win the battle to keep its fair share of home-grown college graduates? A young adult with a college degree is geographically fickle, a place whore. I have no idea how to keep such a beast in town. I wouldn't believe a word coming from someone who claims she or he knows how to retain this demographic. Ignore the hype. Policies or projects designed to retain talent are boondoggles, a waste of money. You're welcome.

Brass tacks, "But even for college graduates, an increase in the supply of college graduates increases wages." Increase the supply of college graduates in a given region and increase the wages, for everyone. Great objective. However, because young adults with a college degree are such place whores, we're not sure how to increase the supply of college graduates. We. Don't. Know. Remember that the next time a consultant comes calling.

We're not completely in the dark about how regions increase the supply of college graduates. Granted, the knowledge is relatively new. As far as I can ascertain, the policy wisdom remains obscure. "Do Colleges and Universities Increase Their Region's Human Capital?"

The amount of human capital within a region is a key determinant of economic vitality and long-run economic success. As the U.S. economy continues to shift away from manufacturing and the distribution of goods toward the production of ideas, the importance of human capital to a region will only grow. However, there is surprisingly little research exploring why some regions possess more human capital than others do. This paper contributes to this small but growing literature by focusing on the extent to which the amount and types of local human capital are related to the activities of colleges and universities located in metropolitan areas.

Our research demonstrates that colleges and universities can raise local human capital levels by increasing both the supply of and demand for skill within metropolitan areas. We find only a small positive relationship between a metropolitan area’s degree production and stock of human capital, which clearly points to the key role migration plays in redistributing human capital across space. At the same time, we find that academic R&D activities act to increase a metropolitan area’s local human capital stock, suggesting that spillovers into the local economy create demand for skilled workers.

Yes, colleges and universities do increase their region's human capital. I was surprised to learn that direct talent production had a small impact on the supply of college graduates in the local labor market. College grads migrate. Thus, colleges and universities don't increase the host region's human capital by graduating more students. Where higher education does push up educational attainment rates of the regional workforce you will find robust academic R&D activities.

Advancing these counter-intuitive findings, places that do bump up the numbers of workers with a college degree via retention and attraction do not benefit from a talent dividend. Not all gains in BA attainment are created equal:

Economic development and urban planning professionals engage in talent attraction and retention in order to improve the local economy, but this research shows that increasing BA attainment does not always lead to better outcomes for the entire labor market, or importantly, low-skill workers. At the individual level, a bachelor’s degree means increased life opportunity almost universally. Regionally, this does not seem to be the case. In some regions increased attainment means better pay and job opportunities for all members of the labor market. Unfortunately, other places become more unequal, as the labor market does not become healthier with higher BA attainment.

In general, a rise in BA attainment is good news for a region. Within that group of "winners" exists substantial variation in overall labor market outcomes. The well-educated and highly skilled do well everywhere. The spillovers to the other parts of the labor market occur in some places and not others. For example, both Pittsburgh, Pennsylvania, and Asheville, North Carolina, posted about the same strong gains in BA attainment rate. Over the same time period of those gains, the Pittsburgh metro increased per capita income and labor force participation, while decreasing the unemployment and poverty rate. In Asheville, the opposite labor market outcomes occurred. Poverty and unemployment went up, per capita income and labor force participation went down. One could conclude that the rise in BA attainment hurt Asheville's labor market. It was a curse. As for Pittsburgh, the rise in BA attainment had the expected effects. Pittsburgh reaped the talent dividend. Asheville did not.

What explains the geographic variation in labor market outcomes given a similar increase in local supply of college graduates? Regions that attract (and perhaps retain) young college graduates for reasons other than employer human capital demands will experience negative labor market outcomes and increasing inequality. More specifically, if university R&D activities drive up the educational attainment rate, then expect a shared prosperity across classes.

Related