Sunday, July 6, 2014

Human capital in Greenville, SC and Dayton, OH

In an earlier post I pointed out the many similarities between Greenville, SC and Dayton, OH as well as the population trends of the two metropolitan areas (MSAs). Greenville has been on a steady upward trend while Dayton has stagnated and in more recent years actually declined. Below is the population chart but updated to include American Community Survey data (ACS) through 2013.

The ACS data shows that Greenville continues to add people while Dayton remains flat after 2010. There is a discontinuity in the Dayton data, which can happen in population data since both the census and ACS rely on samples to project actual populations. Estimates for a year can be revised once all of the data has been analyzed.

Revisions aside, the clear trend is that Greenville is adding people while Dayton is not. Of course both Dayton and Greenville experience population churn i.e. some people move in and some move out every year. But what kind of people?

Below is a graph showing the population share of people in Greenville county and Montgomery county that have a bachelors degree or higher as well as the number of people who moved in to each county from another state, county within the same state, or abroad with a bachelor's degree or higher. This data is only available at the county level and so I looked at the two counties that contain the principle city of each MSA; Greenville is in Greenville county and Dayton is in Montgomery county.

The shares are the the dark blue (Greenville) and brown (Montgomery) lines with the circle markers and were plotted using the right vertical axis. The number of people moving in are the light blue (Greenville) and orange (Montgomery) lines with the square markers and were plotted using the left vertical axis. As shown on the graph Greenville has maintained a larger share of people with a bachelor's degree or higher since 2007 and has had more people move in with a bachelor's degree or higher every year since 2007. As of 2012 the share of residents with a bachelor's degree or higher was 32% in Greenville county and only 25% in Montgomery county.

Having a lot of high human capital workers is good for a city for many reasons. They are on average wealthier which makes them more likely to own their homes, apartments, or condos. Home ownership helps to stabilize neighborhoods and as urbanist Jane Jacobs said "puts eyes on the street" which helps to reduce crime. High human capital parents are also more likely to be involved in the K - 12 schooling of their children which improves and maintains the quality of the school system.

There are also productivity effects from having a lot of high human capital people. High human capital workers produce positive spillover effects that increase the productivity of other workers. The higher productivity and wages of more educated workers also create service jobs for lower skilled workers in so far as the highly educated workers use their money to purchase goods and services like restaurant meals, hair cuts, spa services, cleaning services, and similar things.

If Dayton wants to be considered a great place to live it needs more highly educated workers. Unfortunately for Dayton attracting that type of worker is not an easy task. I will offer some policy proposals in a later post.

My next post about Greenville and Dayton will look at the aggregate employment situation in each MSA.

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