News
Research backs universities
as economic engines
Evidence backs the claim that colleges and universities are economic engines capable of producing and drawing skilled workers to a city, Richard Deitz, a Federal Reserve Bank of New York officer and senior economist, told a UB audience on Friday.
Deitz’s presentation, based on research he conducted, outlined two ways in which higher education institutions cultivate human capital. First, schools supply a region with a knowledgeable labor force by educating local populations and attracting out-of-town students who may take local jobs after graduation. Secondly, research activities create knowledge that can benefit local businesses, raising the demand for skilled laborers in an area.
“It’s this demand side that’s often overlooked,” Deitz told representatives of academic and administrative units who had gathered to hear him speak in the Cellino & Barnes Conference Center in O’Brian Hall, North Campus. The presentation was sponsored by the Office of Economic Engagement.
While producing graduates—the higher education industry’s “bread-and-butter”—results in larger increases in a city’s stock of human capital, an increase in research spending can catalyze a region’s transformation into one that includes more high-skill, high-wage jobs, Deitz said. In a private conversation following his talk, he added that universities can help stimulate economic growth by helping the local business community utilize the knowledge created by research activities. He said there is clear evidence that this type of knowledge transfer raises economic activity in high human-capital areas of the local economy, providing a key ingredient for a region’s economic success.
Deitz opened his presentation by displaying a scatter plot showing that as the percentage of adults over 25 who possess a bachelor’s degree rises, a metropolitan area becomes wealthier. Other graphs illustrated that as research intensity, as measured by expenditures per student, grew in a city, the stock of human capital jumped. Half the residents of the Ithaca area, which graduates fewer students per year than the Buffalo region but spends much more on research, had at least a bachelor’s degree in 2006; just 28 percent of people living in and around Buffalo could say the same.
Deitz noted that as research expenditures rise, the structure of a local labor market swings toward jobs in high human-capital occupations, including the computer, math, science, business, legal, architecture, engineering, arts, entertainment and management fields. Simultaneously, low-skill jobs in such areas as construction, sales and food preparation account for a smaller share of the workforce in places that engage in more higher education activities. A one-standard-deviation increase in research spending leads to a 6.2 percent increase in the percentage of a population working in “high human-capital occupations” in the average metropolitan area, Deitz said. That’s more than double the impact the average region can achieve by increasing degree production by one standard deviation.
Deitz’s findings provide a strong argument for supporting UB 2020, the long-range plan that envisions growing the university’s student body and expanding the institution’s research programs.
“The research dollars that are expended in this community and the graduation rate in this community have made such a positive impact on it,” said Marsha Henderson, vice president for external affairs.
“It’s nice,” she added, “to see some independent research (that) corroborates what we’ve been talking about here and what we think our impact can be on the community if we achieve our vision for the future.”
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