Impacts of Skill Centrality on Regional Economic Productivity and Occupational Income

Abstract

A well-developed perspective in the study of urban systems is that cities are complex systems that manifest as networks of interdependent economic units. These units might be occupations, industries, labor skills, patent technologies, etc. Much research has focused on describing the nature of these networks, quantifying their links, and suggesting applications for policymakers. In this paper, we examine the US skill network, focusing on the relationship between network centrality and economic performance. Here, nodes are represented by individual labor skills, and edge weights are derived from the colocation pattern of skill pairs among 384 US metropolitan statistical areas. The centrality of skills, using three centrality measures, is then aggregated to the occupational and metropolitan level. We find that occupations with higher skill centrality are associated with greater annual salaries, and metropolitan areas with higher skill centrality have higher productivity rates. Overall, these results suggest that the application of traditional network metrics to this view of cities as complex networks can offer new insights into the dynamics of regional economies.

What is the Price of a Skill? Revealing the Complementary Value of Skills

“…The availability of novel data sources representing manifold aspects of interconnectedness have enabled complexity scientists to capture some of the network-related value of skills. Waters & Shutters (2022) examine an U.S. skill network, focusing on the relationship between network centrality and economic performance. They find that occupations with higher skill centrality are associated with greater annual salaries, and metropolitan areas with higher skill centrality have higher productivity rates.…”

“…competencies. Using a network-based approach (Anderson, 2017;Dave et al, 2018;Waters & Shutters, 2022), we measure a skill's complementarity by measuring its (weighted) centrality in the network of skills.…”