Why Talent Matters to Cities
The biggest single factor determining the success of a city’s economy is how well-educated is its population. As the global economy has shifted to knowledge-based industries, the jobs with the best pay have increasingly gone to those with the highest levels of education and skill.
For a long time, we’ve been talking about the talent dividend–how much an area’s college attainment rate is correlated with its per capita income. Since its such an important touchstone for policy, we think its worth taking a close look at what the data say about the strength and importance of this relationship.
Today, we’ve pulled together the latest metro area data–for 2014–from the Census Bureau (on educational attainment) and from the Bureau of Economic Analysis (on per capita income). The following chart plots the relationship between per capita personal income (on the vertical axis) and the fraction of the adult population who have completed at least a four-year college degree (on the horizontal axis). Each dot on the chart represents one of the nation’s metropolitan areas with at least 1 million population (53 of them, according to the 2014 Census tabulations). You can mouse-over a dot to see the corresponding metropolitan area and its educational attainment rate and per capita income.
As you’ll immediately notice, there’s a strong, positive correlation between educational attainment and per capita income. The metro areas with the highest levels of education have the highest levels of per capita personal income. Cities like San Francisco, Boston and Washington have the highest levels of per capita income and the best-educated populations. Cities like Riverside and Las Vegas have low levels of educational attainment and correspondingly lower levels of per capita income. The coefficient of deterimination of the two variables–a statistical measure of the strength of the relationship–is .67, which suggests we can explain two-thirds of the variation in per capita personal income among metropolitan areas, simply by knowing what fraction of their adult population has a four-year degree.
Read the rest of the article here.
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