Many economic development experts continue to insist that jobs are the key to economic growth. Attract the companies and the jobs and the people will follow? Consider this from a recent study by Harvard economist Edward Glaeser and collaborators.
[W]hich way does the causality run? Are skilled industries moving into an area because there are an abundance of skilled workers, or are skilled workers moving to areas because of skill-oriented industries?
While surely both phenomena occur, we think that the evidence supports the view that industries are responding to the area’s skill distribution more than the view that the skill distribution is responding to the area’s industries mix. For example, the share of the population with college degrees in 1940 can explain 35 percent of the variation in the skill mix of industries today. By contrast, the skill composition of the industries in the metropolitan area in 1980 can only explain seven percent of the variation in growth of the population with college degrees since that date. The complex two-sided nature of this relationship makes it difficult to accurately assess the direction of causality, but there are reasons to think that much of the industrial mix in the area is actually responding to the skill distribution.
November 11th, 2008 at 9:56 am
So he’s doing two regressions, and one has a correlation coefficient of 0.35, and the other has one of 0.07? Is that the bottom line?
December 12th, 2009 at 4:51 pm
[...] Which is more important in the new economy, jobs or people? Well, thinkers in this space don’t get any better than Harvard economist Ed Glaeser, whose findings suggest that it is labor supply that matters most. [...]