The Creative Class, Bohemians and Local Labor Market Performance

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08135.pdf SummaryRichard Florida's thought-provoking concept of the Creative Class can be seen a fruitful contribution for our understanding of regional economic development because it stresses the importance of professional activities and the potential role of the cultural milieu for attracting knowledge carriers and innovative people to a location. However, previous attempts to corroborate the basic pillars of Florida's theory typically suffer from serious deficiencies. Since correlation does not imply a causal relationship and reverse causality might be an important issue in the context of regional development, modern empirical techniques are required to look deeper at the phenomena.The present paper aims at scrutinizing two basic hypotheses of Richard Florida's concept of the Creative Class. The first is that the regional concentration of the Creative Class entails better economic performance as measured by employment growth or an increasing wage bill. Moreover, the Creative Class concept should outperform "traditional" indicators of human capital such as the share of high-skilled workers in the regional labour force. Using a large micro data set for West Germany for the observation period 1975 to 2004 containing information on professional activities, we are able to collect panel data for 323 NUTS 3 regions. Indeed, our results indicate that Florida's classification scheme for creative people seems have remarkable explanatory power for regional economic performance. On the basis of dynamic panel estimation we find evidence for the Creative Class playing an important role in regional economic development. In addition, the concept of measuring regional innovative capabilities by counting high-skilled persons seems to be less adequate when it comes to identify the growth potential of a region. Therefore, our econometric investigation confirms the first part of Florida's story. The empirical findings, however, are at odds with the second part. According to Florida; the Creative Class has a taste for a liberal cultural milieu which is typically indicated by a regional concentration of Bohemians, whereas favourable economic conditions do not play a major role. For German data we cannot support this view. There is no evidence for the Creative Class following the Bohemians. By contrast, we find some support for the hypothesis that creative workers prefer living in economically ...

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