Understanding the Economic Performance of Metropolitan Areas in the United States

Abstract

Examining the drivers of metropolitan economic performance, this paper models two dependent variables: change from 1990 to 2000 in gross metropolitan product and MSA employment. It is found that initial-year economic structure (an above average share of manufacturing employment), agglomeration economies, human capital (share of population with bachelor degrees or higher), and presence of state right-to-work laws are positively and significantly related to GMP and employment growth, while the economic age of the area, percentage of Black non-Hispanic residents and average wage at the beginning of the period are negatively and significantly related to both. The regional dummy variables commonly used to explain economic growth, and typically highly significant, are augmented by including climate-related amenity, business environment and economic age. When these three variables are included in the model as independent variables with the regional dummy variables, all three are significant for growth in GMP and the significance of region largely disappears.

Urban Areas in the Transformation of the South: A Review of Modern History

“…The finding regarding college graduates is as expected, but the results for African American population are somewhat surprising-but consistent with Blumenthal et al [21]. …”

“…No other variable produces such consistent results. All studies include measures of the composition of employment in the base year such as percentage of employment in manufacturinga variable that is found to have a negative effect in most studies, but not in the recent studies by Green [20] and Blumenthal et al [21]. Also, all studies include a measure of the size of the metropolitan area in the base year, but this variable enters with a positive sign in some studies and a negative sign in other studies.…”

“…(These variables are not included here because all of the metro areas are in the South.) The racial composition of the population was included only by Blumenthal et al [21], with the result that the percentage of the population that is African American in the base year is negatively associated with employment growth.…”

Economic Distress and Resurgence in U.S. Central Cities

“…Studies focusing exclusively on metropolitan areas found a positive relationship between employment, GDP, and personal income growth and beginning-of-period educational attainment. See Blumenthal, Wolman, and Hill (2009) and Erickcek and McKinney (2006) for research covering the 1990s.…”

Economic Freedom and Employment Growth in U.S. States

“…Haughwout (1999), Blumenthal, Wolman, and Hill (2009), and Puga (2010) have demonstrated that areas with greater agglomeration experience higher growth rates. 18 Assuming a concave path for state economic growth as suggested by the convergence literature (Carlino andMills, 1996, andWebber, White, andAllen, 2005), we expected that states with greater population density in the initial year would have lower rates of future employment growth.…”