New research by Oliver Falck, Michael Fritsch, and Stephan Heblich – “Bohemians, Human Capital, and Regional Economic Growth” – nails it down for Germany.
An emerging literature on the geography of bohemians argues that a region’s lifestyle and cultural amenities explain, at least partly, the unequal distribution of highly qualified people across space, which in turn, explains geographic disparities in economic growth. However, to date, there has been little or no empirical attempt to identify a causal relation. To identify the causal impact of bohemians on economic growth, we apply an instrumental variable approach using as an exogenous instrument the geographic distribution of bohemians prior to the Industrial Revolution in Germany. This distribution was primary the result of competition for prestige between courts and not of economic prosperity. Accordingly, the instrument is independent of today’s regional economic development. Focusing on the concentration of highly skilled people today that is explained by the proximity to exogenous concentrations of bohemians, the observed local average treatment effect supports the hypothesis of a positive impact of bohemians on regional economic development.
Blogger and Indiana University professor Michael Rushton elaborates.
Artists attract development, at least in Germany. Hmm. Now the problem for you sophisticated econometricians out there: what is a good “instrument” for artists in the US? In other words, what things generated bohemias in the US prior to industrialization that were not related to economic conditions? I haven’t been able to think of one (and I’ve been thinking on this a question for a while now).
Any suggestions out there?