The Geographic Distribution of Human Capital: Measurement of Contributing Mechanisms

The skills of residents in a local area matter for tax revenue, and increasing evidence suggests that skills also increase local productivity and growth. The determinants of the geographic distribution of skills at a point in time are the previous generation’s distribution of skills, the intergenerational transmission of skill from parents to children, and migration of differently skilled individuals. I estimate how these factors affect the geographic distribution of skill in the United States. For the local skill measure, I take the ratio of high-skilled to low-skilled populations, where skills are defined with an earnings prediction. I find evidence of regression toward the mean of local skills through intergenerational transmission, which is partially offset by selective migration of skills. I also identify characteristics of labor markets that predict their local skill levels. Small and rural labor markets gain the most skills through intergenerational transmission but lose the most skills through migration. Local college enrollments and subsidies are positively correlated with the attraction of skills through migration. Local climate and tax variables also influence skilled migration.