The Effects of Colleges and Universities on Local Labor Markets

Abstract

SDespite the presence of anecdotal evidence linking regional economic growth and the presence of quality universities in such areas as the Silicon Valley in California and Route 128 in Boston, there have been few systematic studies of the relationship between universities and local economies. In this paper we examined the relationship between four measures of the quality or extent of activities of colleges and universities in an area and various measures of the local labor market activity, including employment, income and migration.We could not reject the hypothesis that there is no relationship between our measures of university activity and the overall employment rate in an SMSA.We did, however, find evidence that colleges and universities affect the composition of employment in an SMSA. The probability of being employed as a scientist or engineer and the probability of being employed in a high-tech industry were both found to increase with the amount of R&D funding at local universities. The probability of being employed in a high-tech industry was also found to be positively related to the number of graduates from local universities. We also found evidence that employment growth rates and earnings are higher in areas with good universities. Finally, the data can not reject the hypothesis that net migration is unrelated to universities.

Understanding the transition to work for first degree university graduates in Portugal

“…In accordance to this perspective, the importance of a university can be measured by its multiplier economic effects, at a regional or national level (Thomas 1995;Brown and Heaney 1997). Plainly, this perspective can be complemented with the importance of the many outputs that result from the functioning of a university (Blackwell et al 2002), in particular the level of knowledge that graduates acquire in their university degrees in order to face (a possible entrance in) the labour market (Drucker and Godstein 2007;Wilton 2008; see also Beeson and Montgomery 1993).…”

Do high technology agglomerations encourage urban sprawl?

“…However much of this is at a very high level of aggregation, pointing to the link between urban size or density and industry productivity (Beeson and Montgomery 1993;Glaeser et al 1992;Varga 1998). Recent evidence produced by Cervero (2001) relating to productivity of firms in sub-districts in the San Francisco Bay area reinforces these findings.…”

Do Colleges and Universities Increase Their Region’s Human Capital?

“…Such spillovers can alter the composition of local labor markets by increasing the demand for specialized skills and by attracting business activity, such as start up firms, seeking to gain access to academic R&D or human capital (Beeson and Montgomery 1993;Audretsch, Lehmann, and Warning 2005;Woodward, Figueiredo, and Guimaraes 2006). While the existing literature demonstrates the importance of colleges and universities to specific industries, particularly those utilizing science and technology, little is known about the extent to which the activities of colleges and universities influence local economic development more generally.…”