Wednesday, April 18, 2012

Brain Drain Paradox

Returning to the Census working paper I blogged about over the weekend:

From 1970 to 2000, whether single or married, young people with college degrees were more likely to have changed residences in the 5 years preceding the census than those without degrees.

That's the crux of the brain drain paradox. A community invests in education and triggers its own demise. The college educated are the most likely to leave. Outmigration eats away at the hard-earned brain gain.

I'm toying with the idea that migration matters more than the college degree. I remain convinced that moving increases the value of a college degree. A reminder from the Federal Reserve Bank of Chicago about the value educational attainment:

In our statistical analysis of 83 metropolitan areas (MSAs) located in the midwestern states from Iowa and Minnesota eastward to Ohio, we examined two main influences on MSA growth. We measure growth both as per capita income and separately by total jobs. Drawing on the large existing body of research, we demonstrate that an MSA’s initial “educational attainment of the adult work force” apparently exerts a strong influence on subsequent growth in jobs and income across MSAs. Educational attainment has been previously found to be influential for several reasons. For one, places with higher educational attainment have been better able to shift into new industries and occupations when their former mainstays (such as manufacturing) have declined. Further, new business start-ups and entrepreneurial activity appear to arise more easily among work force populations having higher education.

Emphasis added. Why does higher educational attainment result in economic restructuring and more entrepreneurial activity? The greater geographic mobility that comes with more education is as good an explanation as any. Almost all Rust Belt cities struggle with anemic inmigration. But some metros, such as Pittsburgh, have more prolific outmigration during an acute downturn. Some places do the fail better than others. The bigger the brain drain, the better the urban economy.

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