It's now well-accepted that the concentration of highly skilled people or of human capital is a key element of economic growth and development. Jane Jacobs
argued that the clustering of talented and energetic people in cities
is the fundamental driving force of economic development. The Nobel
prize-winning University of Chicago economist Robert Lucas formalized Jacobs' insights, showing that human capital externalities, or what have been called Jane Jacobs externalities, are indeed the key factor in economic growth and development.
But most economists measure human capital on the basis of population - the conventional measure being the percentage
of adults with a bachelor's degree or above. Our analysis here takes a
different approach, getting at the density of human capital by looking
at the number of adults with a bachelor's degree per square kilometer.
The map below shows the human capital density of U.S. metros. The
median human capital density across all U.S. metros is roughly 7.4
people per square kilometer. The densest metros have more than 100
degree holders per square kilometer, while the least dense have less
The chart below shows the 10 densest metros in terms of human
capital. The human capital density of these metros ranges from 10 to 20
times the national norm.
It's not surprising that Greater New York tops the list with 156
college graduates per square kilometer. The figure is not just for
Manhattan or New York City where such density would be expected, but for
the entire metro area, including suburbs in Long Island and New Jersey.
Los Angeles places second, surprisingly, with 123 college graduates per
square kilometer. San Francisco is a close third with 122 college
graduates per square kilometer. Two additional metros have 100 or more
degree holders per square kilometer: Bridgeport-Stamford, Connecticut
(104), and the Trenton area in central New Jersey (100), which is the
state capital, includes Princeton and is approximately equidistant
between the Philadelphia and New York-Northern New Jersey commuter
sheds. Greater Boston (84), New Haven (75), Greater Washington, D.C.
(74), Honolulu (73), and Chicago (69) round out the top 10.
The next map shows the human capital density of U.S. metros compared
to what their population density would predict, based on a residual
The next chart shows the 10 metros with the highest residual value -
that is, the highest human capital density compared to what we'd expect
based on their population density.
Now San Francisco tops the list. Bridgeport-Stamford is second - a
long-time upper-crust commuter suburb of New York, it now increasingly
finds itself home to high-end financial operations. It's followed by
Greater Washington, D.C. and Greater Boston. Silicon Valley now makes
the list - in seventh place. But New York falls from first to eighth. A
number of college towns make the list - Boulder and Ann Arbor - as well
as Barnstable (a community composed chiefly of highly educated retirees
and commuters on Cape Cod) and the Trenton area of New Jersey.
So to what degree is human capital density associated with key
regional economic outcomes? Our correlation analysis suggests that human
capital density is closely correlated with regional income (.615),
regional wages (.619), regional economic output (.475), and innovation
(measured as patents, .464). (As usual, I point out that these
correlations point only to associations between variables. They do not
specify any causation or make any claims about the direction of
causality. And, of course, other intervening variables may come into
The scattergraph above plots the relationship between human capital
density and regional wages - a key indicator of regional wealth and
productivity. The fitted line is reasonably steep and suggests a close
association between the two. San Jose (Silicon Valley), San Francisco,
Washington, D.C., Greater New York, Boulder, Ann Arbor, and Durham are
all located above the line - showing even higher wages than their human
capital density would predict.
In my next post, I turn to a related measure for human capital. But
instead of measuring it based on educational attainment, we look at the
work people actually do, examining the density of the creative class of
people employed in science and technology, business and management,
health care and law, and arts, culture, design, media, and