UC Berkeley’s Enrico Moretti has published an excellent piece in the Wall Street Journal.
“Since 1980, data show that the economic success of a city has been increasingly defined by its number of highly educated workers. Cities with many college-educated workers and innovative employers started attracting more of the same, and cities with a less educated workforce and less innovative employers—such as traditional manufacturing—started losing ground.
My research shows that scientists and software engineers are not the only ones who thrive as a result. Using data on nine million workers in 320 U.S. metropolitan areas, I found that for each new innovation-job in a city, five additional jobs are created—not only in professional occupations (lawyers, teachers, nurses) but also nonprofessional occupations (waiters, hairdressers, carpenters). For each new software designer hired at Twitter in San Francisco, there are five new job openings for baristas, personal trainers, therapists and taxi drivers. The most important effect of high-tech companies on the local economy is outside high-tech.”
Moretti calls this the “local multiplier effect”. Those mayors who can deliver high quality of life will be able to attract and retain the skilled and then will enjoy the tax base benefits that Moretti sketches. The city competition for the skilled does not have to be a zero sum game if mayors implement policies that “grow more local” skilled people. Here then, we must embrace the Heckman Agenda and also change the rules that govern local public schools to allow them more flexibility in educating kids. Since the RBC has a taste for “doom and gloom”, this case study of Detroit by George Galster will interest you.