University cities experience higher population and employment growth

Jul 12, 2016

Local areas with universities experience faster population and employment growth.

A study from Motu Economic and Public Policy Research Trust looked at differences between New Zealand Territorial Local Authorities with a university or polytechnic. The research was designed to see whether having a higher education institution could lead to an inflow of people and jobs. The inflow may reflect improvements in both the local level of productivity and the local stock of amenities.

“There is a consistently positive relationship between university presence and local population and employment growth,” said Arthur Grimes, Senior Fellow at Motu. “For every extra student per 100 people, the annual population growth rate increases by 0.19 percent (e.g. from 2.00% to 2.19% p.a.) and the employment growth rate increases by 0.14 percent. These increases are after accounting for the effects of other factors on growth.”

There are some similarities for the effects of increases in polytechnic EFTS shares, but their association with growth is weaker and far less clear. Because of limitations in the information available on equivalent full time student counts in wānanga and private training establishments, the sample does not include data from these institutions.

“The institutions that we do include account for over three quarters of the overall EFTS population in New Zealand,” said Dr Grimes. “They include almost the entire EFTS population enrolled in bachelor and post-graduate degrees, and the vast majority of research and development produced by higher educational institutions.”

The research suggests that workers who qualify with a vocational qualification are less likely to stay where they studied, while degree-qualified workers are more likely to congregate in cities with universities.

“We didn’t find any synergies between university presence and measures of innovation for local growth,” said Dr Grimes. “Similarly, the research found no evidence that university presence affected the sort of firms that located in the region.”

“Based on our results, local policy-makers wishing to support local employment and population growth – and especially those in university cities – may wish to facilitate the expansion of their higher education institutions,” said Dr Grimes.

The study, Higher Education Institutions and Regional Growth in New Zealand by Eyal Apatov and Arthur Grimes received funding from the Resilient Urban Futures Programme grant from the Ministry of Business, Innovation and Employment.