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In his New York City talk earlier this month (January 2006), Harvard Professor Edward Glaeser showed that highways and the automobile ended the need to have cities as fixed terminals for water or rail transportation. This fact and lower-wage competition from overseas also ended the need for U.S. cities as manufacturing centers. So he wondered out loud: what is today’s rationale for cities, other than as places for people to consume? He decides that cities today are places for the exchange and amplification of ideas:
Glaeser argues that because of their role as idea centers, cities with more skilled workers (i.e., more college graduates) grow faster than those which are not:
- NYC’s share of the U.S. population peaked in 1930. Since then, out of the ten most populous U.S. cities only NYC and Los Angeles have since gained population, because they have been becoming more skilled.
- Employers seek out skilled workers. Occupational patterns in 1880 and density of education in 1940 predict later population growth.
- In the Midwest and East, the share of cities’ populations with college degrees is associated with their subsequent growth.[2]
Agglomerationist economists have even put a number on the value of proximity to college-educated workers to labor productivity. Stuart Rosenthal and William Strange, using 2000 Census data, conclude that providing a college education to 50,000 workers who do not have one, and are within five miles of a city, would elevate a local worker’s wage by 10 percent.[3]
Next: Implications for business, government and educational policy.
[1] Remarks to the Manhattan Institute, New York City, January 10, 2006.
[2] Glaeser is candid in admitting that his theory doesn’t work in the West and South, where in places like Las Vegas car-based “consumption city” development is still under way.
[3] Stuart S. Rosenthal, Syracuse University, ssrosent@maxwell.syr.edu, www-cpr.maxwell.syr.edu/faculty/rosenthal/ and William C. Strange, RioCan Real Estate Investment Trust and University of Toronto, wstrange@rotman.utoronto.ca, www.rotman.utoronto.ca/~wstrange/, “The Attenuation of Human Capital Spillovers: A Manhattan Skyline Approach,” October 13, 2005. The “Manhattan Skyline” refers to the observed pattern of big buildings in downtown and midtown Manhattan, with smaller buildings in between, reflecting in part the location of bedrock. The benefits they observe drop by up to one-third if the education of the local workforce took place between 5 and 25 miles from the city, but some estimated effects persist beyond 50 miles. A benefit of a 10 percent wage increase is roughly equivalent to the private returns from one additional year of schooling.
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