Discussion Paper

How Colleges and Universities Can Help Their Local Economies

Abstract: Policymakers are increasingly viewing colleges and universities as important engines of growth for their local areas. In addition to having direct economic impacts, these institutions help to raise the skills of an area’s workforce (its local “human capital”), and they do this in two ways. First, by educating potential workers, they increase the supply of human capital in a region. Perhaps less obviously, these schools can also raise a region’s demand for human capital by helping local businesses create jobs for skilled workers. In this post, we draw on our recent academic research and Current Issues article to outline these pathways and how they might inform local economic development policy. (We also discuss our findings in a new video.)

Keywords: human capital; local economic development; Regional economy; knowledge spillovers; higher education;

JEL Classification: R1;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2012-02-13

Number: 20120213