Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 88: Inside the Black Box of Regional Development - human capital, the creative class and tolerance

Richard Florida (), Charlotta Mellander () and Kevin Stolarick ()
Additional contact information
Richard Florida: George Mason University, US
Charlotta Mellander: Jönköping International Business School (JIBS) and CESIS
Kevin Stolarick: Carnegie Mellon University , US

Abstract: While there is a general consensus on the importance of human capital to regional development, debate has emerged around two key issues. The first involves the efficacy of educational versus occupational measures (i.e. the creative class) of human capital, while the second revolves around the factors that effect its distribution. We use structural equation models and path analysis to examine the effects of these two alternative measures of human capital on regional income and wages, and also to isolate the effects of tolerance, consumer service amenities, and the university on its distribution. We find that human capital and the creative class effect regional development through different channels. The creative class outperforms conventional educational attainment measures in accounting for regional labor productivity measured as wages, while conventional human capital does better in accounting for regional income. We find that tolerance is significantly associated with both human capital and the creative class as well as with wages and income.

Keywords: Human Capital; Creative Class; Tolerance; Wages; Income; Regional Development

JEL-codes: J24; O30; R10; R20

50 pages, April 18, 2007

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