Working Paper

Do Research Universities Recession Proof Their Regions? Evidence from State Flagship College Towns

Abstract: Using synthetic differences-in-differences models, we study whether U.S. counties containing state flagship universities experienced resiliency via lower unemployment rates during the past three U.S. recessions. We find an insignificant effect for the 2001 recession and a large resiliency effect for the 2008-2009 recession. However, counties with flagship universities faced higher unemployment rates during the 2020 recession, and were therefore less resilient to the Covid-19 recession than other counties. These results support the hypothesis that stable consumption demand for non-tradables drives resiliency, which was absent during the 2020 recession when most university campuses were closed to students due to Covid-19 restrictions.

Keywords: Regional Business Cycles; Unemployment; Research Universities; Regional Resilience;

JEL Classification: R11; R23; R53;

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Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Working Paper

Publication Date: 2024-06-07

Number: 24-05