Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital

44 Pages Posted: 16 Nov 2005 Last revised: 28 Sep 2010

See all articles by Jesse M. Shapiro

Jesse M. Shapiro

Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 2005


From 1940 to 1990, a 10 percent increase in a metropolitan area's concentration of college-educated residents was associated with a .8 percent increase in subsequent employment growth. Instrumental variables estimates support a causal relationship between college graduates and employment growth, but show no evidence of an effect of high school graduates. Using data on growth in wages, rents and house values, I calibrate a neoclassical city growth model and find that roughly 60 percent of the employment growth effect of college graduates is due to enhanced productivity growth, the rest being caused by growth in the quality of life. This finding contrasts with the common argument that human capital generates employment growth in urban areas solely through changes in productivity.

Suggested Citation

Shapiro, Jesse M., Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital (September 2005). NBER Working Paper No. w11615. Available at SSRN:

Jesse M. Shapiro (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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