The Production, Stock, and Flow of Human Capital in New York s Metropolitan Areas

Transcription

1 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

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 more graduates? What is the labor supply response? Labor demand considerations What is the relationship between human capital production and human capital levels? Do places with more higher education institutions have higher human capital levels?

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 United States 25% Ithaca 40% New York Metro Area 32% Albany 30% Rochester 27% Syracuse 25% Buffalo 24% Glens Falls 20% Binghamton 21% Utica 19% *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 $80,000 Correlation Between Human Capital and Economic Activity GDP Per Capita $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 New York NY 30% College Degree $51,440 GDP Per Capita Buffalo NY 23% College Degree $31,347 GDP Per Capita $ College Degree (%) Rochester NY 27% College Degree $36,798 GDP Per Capita Boston MA 36% College Degree $54,587 GDP Per Capita Source: U.S. Bureau of Economic Analysis; U.S. Bureau of the Census

7 PRODUCTION Just 10 MSAs produce roughly 1/4 of all degrees 150, ,000 Distribution of Higher Education Degrees Produced by MSA, 2006 New York NY 143,971 Degrees 120,000 Degrees Produced 105,000 90,000 75,000 60,000 45,000 Buffalo 13,927Degrees Albany 12,771 Degrees 30,000 15,000 Rochester 11,836 Degrees Syracuse 9,736 Degrees Binghamton 3,507 Degrees 0 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 2006Upstate NY, 2006 Rank MSA Degrees Rank MSA Degrees 1. New York 143, Buffalo 13, Los Angeles 89, Albany 12, Chicago 68, Rochester 11, Boston 59, Syracuse 9, Washington D.C. 48, Binghamton 3, Philadelphia 45, Utica 1, San Francisco 31, Jamestown 1, Minneapolis 31, Glens Falls 0 9. Dallas 30,603 Upstate MSAs 54, San Diego 25,905 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 Buffalo Rochester Syracuse Utica Albany Jamestown 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 2006New York, 2006 Rank MSA Degrees Per Capita* Rank MSA Degrees Per Capita* 1. State College PA Albany Bloomington IN Binghamton Bryan-College Station TX Syracuse Columbia MO Buffalo Gainesville FL Rochester Champaign-Urbana IL Jamestown Iowa City IA New York City Athens GA Utica Lafayette-W. Lafayette IN Glens Falls Auburn-Opekika AL 41.8 *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 EXPORT INTENSITY Most metros are net exporters of human capital Human Capital Production Rate Regional Flow of Human Capital, Bloomington IL Bryan-College Station TX Gainesville FL Athens GA 20 Syracuse Albany Austin TX Toledo OH Buffalo 10 New York Rochester Wilmington NC New Orleans LA Net Importers Sante Fe NM Glens Falls Change in Human Capital Stock Rate State College PA Iowa City IA Net Exporters Source: IPEDS, IPUMS

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