Advertisement

The urban knowledge economy and employment growth: a spatial structural equation modeling approach

  • Frank G. van OortEmail author
  • Johan H. L. Oud
  • Otto Raspe
Open Access
Special Issue Paper

Abstract

Many European governments have been stimulating their urban economies by focusing on knowledge economy potentials of metropolitan regions, especially R&D-based indicators. We analyze employment growth in terms of conventional determinants—investments, wages, income, and specialization indices of industrial, distribution and business services activities—and three latent knowledge economy components (density of knowledge workers, R&D and innovativeness) for the Netherlands based on a sample of 496 municipalities. We apply a structural equation model (SEM) made up of a measurement model that relates the latent knowledge economy components to their observable indicators and a structural model that estimates the impacts of the determinants on employment growth. In addition to the conventional determinants and the knowledge economy components, the SEM accounts for spatial spillover effects, degree of urbanization and core-periphery dichotomy. The latent variables ‘density of knowledge workers’ and ‘innovativeness’ have significant and strong impacts. Since they are more common in larger than smaller urban agglomerations, we conclude that the impacts of these variables on employment growth are stronger in the former than the latter. The latent variable ‘R&D-intensity’ is not significantly, positively related to urban employment growth. This suggests that policy should emphasize innovation output and knowledge workers density rather than R&D to capture urban growth potentials in the knowledge economy.

JEL Classification

O31 R12 R15 R58 

Notes

Open Access

This article is distributed under the terms of the Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

References

  1. Acs ZJ (2002) Innovation and the growth of cities. Edward Elgar, CheltenhamGoogle Scholar
  2. Acs Z, Varga A (2002) Introduction to the special issues on regional innovation systems. Int Reg Sci Rev 25:3–7. doi: 10.1177/016001702762039358 CrossRefGoogle Scholar
  3. Anselin L (1988) Spatial econometrics: methods and models. Kluwer, DordrechtGoogle Scholar
  4. Anselin L, Varga A, Acs ZJ (2000) Geographical and sectoral characteristics of academic knowledge externalities. Pap Reg Sci 79:435–443. doi: 10.1007/PL00011486 CrossRefGoogle Scholar
  5. Audretsch DB, Feldman MP (1996) R&D spillovers and the geography of innovation and production. Am Econ Rev 86: 630–640Google Scholar
  6. Bates T (1990) Entrepreneur human capital inputs and small business longevity. Rev Econ Stat LXXII: 551–559. doi: 10.2307/2109594 CrossRefGoogle Scholar
  7. Batten D (1995) Network cities: creative urban agglomerations for the 21st century. Urban Stud 32:313–327. doi: 10.1080/00420989550013103 CrossRefGoogle Scholar
  8. Black G (2004) The geography of small firm innovation. Kluwer, DordrechtGoogle Scholar
  9. Black S, Lynch L (2001) How to compete: the impact of workplace relations and information technology on productivity. Rev Econ Stat 83(3):434–445CrossRefGoogle Scholar
  10. Broersma LJ, van Dijk J (2002) Regional labour market dynamics in the Netherlands. Pap Reg Sci 81: 343–363. doi: 10.1007/s101100200126 CrossRefGoogle Scholar
  11. Broersma LJ, Oosterhaven J (2005) Regional differences in labour productivity in the Netherlands. Tijdschr Econ Soc Geogr 96:334–343. doi: 10.1111/j.1467-9663.2005.00464.x CrossRefGoogle Scholar
  12. Camagni R, Capello R (2004) The city network paradigm: theory and empirical evidence. In: Capello R, Nijkamp P (eds) Urban dynamics and growth. Elsevier, Amsterdam, pp 495–529Google Scholar
  13. Capello R, Nijkamp P (eds) (2004) Urban dynamics and growth. Advances in urban economics. Elsevier, AmsterdamGoogle Scholar
  14. Clement W, Hammerer G, Schwarz K (1998) Intangible capital from an evolutionary perspective. OECD, ParisGoogle Scholar
  15. Combes PP (2000) Economic structure and local growth: France 1984–1993. J Urban Econ 47:329–355. doi: 10.1006/juec.1999.2143 CrossRefGoogle Scholar
  16. Cooke P, Morgan K (1998) The associational economy. Firms, regions and innovation. University Press, OxfordGoogle Scholar
  17. Cortright J, Mayer H (2001) High-tech specialization: a comparison of high-tech centres. The Brookings Survey papers, pp 1–18Google Scholar
  18. Dosi G (1988) Sources, producers and microeconomic effects of innovation. J Econ Lit 26: 1120–1171Google Scholar
  19. Drennan MP (2002) The information economy and American cities. The Johns Hopkins University Press, BaltimoreGoogle Scholar
  20. Drucker P (1959) Landmarks of tomorrow: a report on the new post-modern world. Harper, New YorkGoogle Scholar
  21. Feldman MP (1994) The geography of innovation. Kluwer, DordrechtGoogle Scholar
  22. Florax RJGM, Folmer H, Rey S (2003) Specification searches in spatial econometrics: the relevance of Hendry’s methodology. Reg Sci Urban Econ 33:557–579. doi: 10.1016/S0166-0462(03)00002-4 CrossRefGoogle Scholar
  23. Florida R (2002) The rise of the creative class. Basic Books, New YorkGoogle Scholar
  24. Foray D (2004) The economics of knowledge. The MIT Press, CambridgeGoogle Scholar
  25. Glaeser EL, Maré DC (2001) Cities and skills. J Labor Econ 19:316–342. doi: 10.1086/319563 CrossRefGoogle Scholar
  26. Glaeser EL, Saiz A (2003) The rise of the skilled city. Working paper 10191. National Bureau of Economic Research, CambridgeGoogle Scholar
  27. Glaeser EL, Kallal HD, Scheinkman JA, Shleifer A (1992) Growth in cities. J Polit Econ 100:1126–1152. doi: 10.1086/261856 CrossRefGoogle Scholar
  28. Godin B (2004) The new economy: what the concept owes to the OECD. Res Policy 23:679–690. doi: 10.1016/j.respol.2003.10.006 CrossRefGoogle Scholar
  29. Hall P (1966) The world cities. Weidenfeld and Nicolson, LondonGoogle Scholar
  30. Hall P (2000) Creative cities and economic development. Urban Stud 37:639–649. doi: 10.1080/00420980050003946 CrossRefGoogle Scholar
  31. Henderson JV (1997) Externalities and industrial development. J Urban Econ 42:47–70. doi: 10.1006/juec.1997.2036 CrossRefGoogle Scholar
  32. Jöreskog KG, Sörborn D (1996) LISREL 8: user’s reference guide. Scientific Software International, ChicagoGoogle Scholar
  33. Jaffe A, Trajtenberg M (2002) Patents, citations and innovation. A window on the knowledge economy. The MIT Press, CambridgeGoogle Scholar
  34. Jaffe AB, Trajtenberg M, Henderson R (1993) Geographic localization of knowledge spillovers as evidenced by patent citations. Q J Econ 36:577–598. doi: 10.2307/2118401 CrossRefGoogle Scholar
  35. Lucas RE (1988) On the mechanism of economic development. J Monet Econ XXII:3–42. doi: 10.1016/0304-3932(88)90168-7 CrossRefGoogle Scholar
  36. Lucas RE (1993) Making a miracle. Econometrica 61:251–272. doi: 10.2307/2951551 CrossRefGoogle Scholar
  37. Machlup F (1962) The production and distribution of knowledge in the United States. University Press, PrincetonGoogle Scholar
  38. Mathur VK (1999) Human-capital-based strategy for regional economic development. Econ Dev Q XIII:203–216. doi: 10.1177/089124249901300301 CrossRefGoogle Scholar
  39. McCann P (2004) Urban scale economies: statics and dynamics. In: Capello R, Nijkamp P (eds) Urban dynamics and growth. Elsevier, Amsterdam, pp 31–56Google Scholar
  40. McCloskey DN, Klamer A (1995) One quarter of GDP is persuasion. Am Econ Rev 85: 191–195Google Scholar
  41. Neale MC, Boker SM, Xie G, Maes HH (2003) Mx: statistical modeling, 6th edn. Department of Psychiatry, RichmondGoogle Scholar
  42. OECD (2003) Science. Technology and Industry Scoreboard, ParisGoogle Scholar
  43. Oud JHL, Folmer H (2008) A structural equation approach to models with spatial dependence. Geogr Anal 40:152–166CrossRefGoogle Scholar
  44. Van Oort FG (2004) Urban growth and innovation. Ashgate, AldershotGoogle Scholar
  45. Van Oort FG, Burger M, Raspe O (2008) Inter-firm relations and economic clustering in the Dutch Randstad region. In: Blien U, Maier G (eds) The economics of regional clusters. Networks, technology and policy. Edward Elgar, Cheltenham, pp 145–165Google Scholar
  46. Parr JB (2005) Perspectives on the city-region. Reg Stud 39:555–566. doi: 10.1080/00343400500151798 CrossRefGoogle Scholar
  47. Raspe O, Van Oort FG (2006) The knowledge economy and urban economic growth. Eur Plann Stud 14:1209–1234. doi: 10.1080/09654310600933322 CrossRefGoogle Scholar
  48. Rosenthal SS, Strange W (2004) Evidence on the sources of agglomeration economies. In: Henderson JV, Thisse JF (eds) Handbook of regional and urban economics. Elsevier, Amsterdam, pp 2119–2172Google Scholar
  49. Saviotti PP, Pyka A (2004) Economic development, variety and employment creation. Rev Econ 55: 1023–1059Google Scholar
  50. Surinach J, Moreno R, Vaya E (eds) (2007) Knowledge externalities, innovation clusters and regional development. Edward Elgar, CheltenhamGoogle Scholar
  51. Thissen MJPM (2005) The size of agglomeration economies in the Netherlands. An analysis with a spatial CGE-model. Working paper. RPB, The HagueGoogle Scholar
  52. Wallsten SJ (2001) An empirical test of geographic knowledge spillovers using geographic information systems and firm-level data. Reg Sci Urban Econ 31: 571–599CrossRefGoogle Scholar
  53. Warsh D (2006) Knowledge and the wealth of nations. W.W. Norton, New YorkGoogle Scholar
  54. Wever E, Stam E (1999) Clusters of high-technology SME’s: the Dutch case. Reg Stud 33: 391–400CrossRefGoogle Scholar

Copyright information

© The Author(s) 2009

Authors and Affiliations

  • Frank G. van Oort
    • 1
    Email author
  • Johan H. L. Oud
    • 2
  • Otto Raspe
    • 3
  1. 1.Department of Economic GeographyUtrecht UniversityUtrechtThe Netherlands
  2. 2.Radboud University NijmegenNijmegenThe Netherlands
  3. 3.Netherlands Environmental Assessment AgencyThe HagueThe Netherlands

Personalised recommendations