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MOTIVATION

The Production, Stock, and Flow of Human Capital in New York’s Metropolitan Areas New York and the Global Economy Rockefeller Institute October 6, 2008. MOTIVATION. A region’s level of human capital is associated with higher per capita incomes and faster regional growth

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MOTIVATION

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  1. The Production, Stock, and Flow of Human Capital in New York’s Metropolitan AreasNew York and the Global EconomyRockefeller InstituteOctober 6, 2008

  2. MOTIVATION • A region’s level of human capital is associated with higher per capita incomes and faster regional growth • Can local institutions raise human capital levels? • Through producing graduates that stay? (Labor supply) • What is the relationship between human capital production and human capital levels? • Do places with more higher education institutions have higher human capital levels? • Through what mechanism does this relationship hold?

  3. AGENDA • What is human capital and why is it important to a region? • Examine New York’s human capital stock • Measure the human capital producing industry • Quantify the relationship between regional production of human capital and stock

  4. HUMAN CAPITAL The stock of productive skills and technical knowledge embodied in labor Higher levels of human capital increase the productivity of individuals Similarly, higher levels of human capital are associated with faster regional growth Between 1980 & 2000, metro areas where: - less than 10% had college degrees, population growth averaged 13% - more than 25% had college degrees, population growth averaged 45% Correlation holds for declining metros and among regions in cold climates Individuals with the same levels of human capital are more productive in regions where their peers have more human capital Evidenced through wage premiums (higher for less educated workers)

  5. HUMAN CAPITAL Metro areas vary widely in human capital stock Population 18+ With Bachelor’s Degree* or Higher 25% United States 40% Ithaca 32% New York Metro Area 30% Albany 27% Rochester 25% Syracuse 24% Buffalo 20% Glens Falls 21% Binghamton 19% Utica *Note: Degrees throughout this presentation include Bachelors, Masters, Doctoral, and First-Professional degrees (but not Associates). Source: 2006 American Community Survey

  6. HUMAN CAPITAL Education tends to translate into wealth Correlation Between Human Capital and Economic Activity New York NY 30% College Degree $51,440 GDP Per Capita Boston MA 36% College Degree $54,587 GDP Per Capita GDP Per Capita Rochester NY 27% College Degree $36,798 GDP Per Capita Buffalo NY 23% College Degree $31,347 GDP Per Capita College Degree (%) Source: U.S. Bureau of Economic Analysis; U.S. Bureau of the Census

  7. PRODUCTION Just 10 metros produce roughly ¼ of all degrees Distribution of Higher Education Degrees Produced by MSA, 2006 New York NY 143,971 Degrees Degrees Produced Buffalo 13,927Degrees Albany 12,771 Degrees Rochester 11,836 Degrees Syracuse 9,736 Degrees Binghamton 3,507 Degrees MSA Rank Source: Integrated Postsecondary Education Data System (IPEDS)

  8. PRODUCTION University centers concentrated in Northeast Geographic Distribution of Higher Education Degrees Produced by MSA, 2006 First Quartile Second & Third Quartiles Fourth Quartile Source: IPEDS

  9. PRODUCTION Top producers of human capital Higher Education Degrees Produced, Top 10 and Upstate NY, 2006 Higher Education Degrees Produced, Top 10, 2006 Rank MSA Degrees Rank MSA Degrees 143,971 13,927 New York Buffalo 1. 26. 89,311 12,771 Los Angeles Albany 2. 32. 68,321 11,836 Chicago Rochester 3. 36. 59,032 9,736 Boston Syracuse 4. 51. 48,525 3,507 Washington D.C. Binghamton 5. 123. 45,986 1,658 Philadelphia Utica 6. 176. 31,604 San Francisco 193. Jamestown 1,240 7. 31,315 Minneapolis 267. Glens Falls 0 8. Upstate MSAs 54,675 30,603 Dallas 9. 25,905 San Diego 10. Source: IPEDS

  10. PRODUCTION “College town” concentrations in Great Lakes Geographic Distribution of Higher Education Degrees Produced Per Capita by MSA, 2006 First Quartile Second & Third Quartiles Fourth Quartile Source: IPEDS, IPUMS

  11. PRODUCTION Geographic Distribution of Higher Education Degrees Produced Per Capita by MSA, 2006 Glens Falls Utica Rochester Syracuse Albany Buffalo James-town Binghamton Dutchess Newburgh New York First Quartile Second & Third Quartiles Fourth Quartile Source: IPEDS, IPUMS

  12. PRODUCTION College towns have highest per capita production Higher Education Degrees Produced Per Capita, Top 10 and New York, 2006 Higher Education Degrees Produced Per Capita, Top 10, 2006 Rank MSA Degrees Per Capita* Rank MSA Degrees Per Capita* 81.1 14.2 State College PA Albany 1. 48. 71.8 14.2 Bloomington IN Binghamton 2. 49. 68.2 13.3 Bryan-College Station TX Syracuse 3. 55. 58.9 12.2 Columbia MO Buffalo 4. 65. 57.2 10.8 Gainesville FL Rochester 5. 74. 55.5 9.2 Champaign-Urbana IL Jamestown 6. 86. 54.6 Iowa City IA 103. New York City 8.1 7. 46.7 Athens GA 160. Utica 5.6 8. 267. Glens Falls 0.0 43.2 Lafayette-W. Lafayette IN 9. 41.8 Auburn-Opekika AL 10. *Note: Degrees Per Capita measures degrees scaled by population (000s). Source: IPEDS, IPUMS

  13. HUMAN CAPITAL Can a region raise its human capital level by retaining it where it is produced? Human capital, like physical capital, is a mobile resource: where it is produced may not matter as much as where it is in demand Local production of physical capital is not necessarily tied to retaining and using it locally—the same may be true for human capital Regional human capital is produced in pockets and redistributed

  14. HUMAN CAPITAL Productive capacity and human capital stock • We estimate the relationship between degrees produced (per 1,000 population) and human capital stock (percent of 25+ population with BA or higher) • We find an increase in productive capacity of 10 percent is associated with a .8 percent increase in human capital levels • Translation: for the average metro with 25% degrees • a 10 percent increase in productive capacity would lead to a small increase in degrees from 25 to 25.2 percent • Conclusion: relationship is statistically significant, but small―migration plays a key role in the redistribution of human capital across metropolitan areas

  15. Albany Albany New York New York Rochester Rochester EXPORT INTENSITY Most metros are net exporters of human capital Regional Flow of Human Capital, 2000 - 2006 State College PA Bloomington IL Bryan-College Station TX Iowa City IA Gainesville FL Human Capital Production Rate Athens GA Net Exporters Net Exporters Syracuse Austin TX Buffalo Toledo OH Wilmington NC Net Importers Net Importers New Orleans LA Sante Fe NM Glens Falls Change in Human Capital Stock Rate Source: IPEDS, IPUMS

  16. EXPORT INTENSITY Top exporters and top importers Export ratios for selected MSAs (production divided by change in human capital, 2000-2006) Export Ratio Export Ratio Export Ratio Bottom MSAs*(high net importers) New York MSAs Top MSAs*(high net exporters) 105.4 0.2 11.7 Muncie IN Fort Myers-Cape Coral FL Binghamton 87.6 0.2 3.8 Bryan-College Station TX Rochester MN Buffalo 81.7 0.1 2.8 Santa Cruz CA Sarasota FL Syracuse 67.3 0.1 2.7 Bloomington IN Naples FL Rochester 38.8 0.0 2.3 Jackson TN Panama City FL Albany 37.5 0.0 1.7 Tallahassee FL Fort Walton Beach FL Jamestown 37.2 0.0 1.3 Monroe LA Racine WI New York City 21.0 0.0 1.2 Dayton-Springfield OH Fort Pierce FL Utica 20.5 0.0 0.0 Tuscaloosa AL Merced CA Glens Falls 17.1 0.0 Waterloo-Cedar Falls IA Ocala FL *Note: Among MSAs with increases in human capital. Values greater than one indicate a net export position, values less than one indicate a net import position. Source: IPEDS, IPUMS

  17. CONCLUSIONS Human capital is an important determinant of regional vitality The presence of local colleges and universities is associated with higher human capital levels This correlation is not necessarily strictly due to an increase in locally produced graduates who stay in the region Migration plays a key role in redistributing human capital Spillovers from university activity, like research and technology transfer, also matter The relationship is complex―labor demand is key, much of which is independent of the higher education system

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