Will Talent Attraction and Retention Improve Metropolitan Labor Markets?
Working Paper 2015-4
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