Do colleges and universities increase their region's human capital?

Abstract

We investigate whether the degree production and R&D activities of colleges and universities are related to the amount and types of human capital in the metropolitan areas where they are located. Our results indicate only a small positive relationship exists between a metropolitan area's production and stock of human capital, suggesting that migration plays an important role in the geographic distribution of human capital. We also find that academic R&D activities increase local human capital levels, suggesting that spillovers from such activities can raise the demand for human capital. Consistent with these results, we show that metropolitan areas with more higher education activity tend to have a larger share of workers in high human capital occupations. Thus, this research indicates that colleges and universities can raise local human capital levels by increasing both the supply of and demand for skill.