Will Talent Attraction and Retention Improve Metropolitan Labor Markets?

Stuart Andreason

Working Paper 2015-4
April 2015

Download the full text of this paper (290 KB) Adobe PDF file format

Since the early 1990s, metropolitan entities and local governments have focused incentives, policies, and investments on getting highly educated and skilled workers to locate in their communities. In particular, these metro areas and governments want to attract workers who hold a bachelor's degree or higher and have had a profound effect on the form and management of metropolitan areas. However, there is no clear evidence that growth in bachelor's- or higher-degree (BA+) attainment improves metropolitan labor market outcomes. I use an outcomes-based cluster-discriminant analysis to test whether or not metropolitan areas with growth in BA+ attainment from 1990 to 2010 that is above the national average experienced improvements in the local labor market. Increased BA+ attainment leads to two distinct set of local labor market outcomes: one in which earnings per job increase but inequality, unemployment, and poverty rates rise, and the other in which income inequality growth is low and unemployment and poverty rates decline but earnings per job are stagnant or negative. I find evidence that "educational segregation," restrictive land-use policies, crime, and changes in military employment all predict outcomes.

JEL classification: J10, O21, R11

Key words: educational attainment, metropolitan labor markets, labor market outcomes, talent attraction and retention


The author gratefully acknowledges Laura Wolf-Powers, Ned Hill, and Genie Birch for their guidance in this research. He also thanks Julie Hotchkiss for helpful comments. The views expressed here are the author's and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the author's responsibility.
Please address questions regarding content to Stuart Andreason, Community and Economic Development, Federal Reserve Bank of Atlanta, 1000 Peachtree Street NE, Atlanta, GA 30309-4470, 404-498-7242, stuart.andreason@atl.frb.org.
Subscribe to receive e-mail notifications about new papers.