Sunday, December 21, 2014

Economists reveal Philadelphia's economic identity as 'thinking' region

A new research paper seeks to relate the types of knowledge in cities to the productivity and income of their regions.

Economists reveal Philadelphia's economic identity as 'thinking' region

Never judge a book by its cover, nor a city by its portrayal in Hollywood movies. That’s what statistics are for.

Would you believe me if I told you some economists classifying U.S. and Canadian cities put Philadelphia in the exclusive-sounding category of “thinking” cities?

Take that, Rocky.

Now, they didn’t come to this determination by way of Philadelphia’s revolutionary roots, although the Declaration of Independence and U.S. Constitution are certainly wonderful examples of thinking that’s been done here.

No, this is another example of researchers trying to figure out the relationship between regional economies and their knowledge bases.

For far too long, we’ve assumed that if you want to take an economy to a higher level, you need only increase the percentage of a region’s population that holds a college degree.

After studies a decade ago warned of a “brain drain” in Philadelphia, several initiatives were begun to persuade more students who get their college degrees from area institutions to stay and work in the region.

All well and good, but a new research paper, titled “Knowledge in Cities,” on the website of the Federal Reserve Bank of New York makes the case that lots of jobs don’t require skills or talents that are acquired via college degrees. (Read it here.)

The paper suggests that regions might have better success at juicing their economies by comparing notes with other regions that have similar bases of human capital.

And that’s how Philadelphia became a “thinking” region, which Todd Gabe, associate professor of economics at the University of Maine, and three other researchers define as possessing “high knowledge” about arts, humanities, information technology, and commerce, but “low knowledge” about manufacturing.

Thinking is one of 11 distinct clusters based on the types of knowledge used in the workforce. The others are: building, comforting, engineering, enterprising, farming, innovating, making, teaching, understanding, and working.

Gabe told me that they weren’t looking to produce a list of metro areas from best to worst. The United States needs areas that are great at farming and taking care of patients as much as it needs to develop faster computer processors and better cancer treatments.

They used occupational-level data gathered by the U.S. Department of Labor to create a “knowledge profile” for each region. Then, they grouped them into clusters. So Philadelphia shares the “thinking” cluster not only with major cities such as New York and San Diego, but also smaller Las Cruces, N.M., and Portland, Maine.

What caught my attention was the analysis done to evaluate the knowledge clusters in terms of regional productivity and income. Thinking and enterprising regions score well by those measures because they have significant concentrations of information technology, commerce, and engineering, which are important for growth and regional economic development.

Good for us, but I found myself envying regions that scored highest in terms of productivity and earnings per capita — Boston and Raleigh-Durham, N.C., (innovating cluster) and San Jose, Calif., and Huntsville, Ala., (engineering cluster).

Gabe said it’s important for leaders to understand a region’s economic identity so that the available human capital can thrive. Identifying commonalities among regions should prompt them to reach out to their peers to learn what may work to nurture a sector.

Thus, the paper says, Athens, Ga., would be better served by visiting State College, Pa., a fellow “teaching” region and university town, than by a trip to nearby Atlanta, which falls in the “enterprising” cluster.

Makes sense. Although as much as Mayor Nutter’s economic team may try to make a case for a fact-finding trip to fellow “thinking” region Honolulu, Hawaii, given the current budget situation, I think they’ll just send an e-mail.

Mike Armstrong Inquirer Columnist
About this blog
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980. Reach Mike at marmstrong@phillynews.com.

Mike Armstrong Inquirer Columnist
Business Videos:
Also on Philly.com:
Stay Connected