When it comes to creating jobs in a city, the age-old theory that “if you build it, they will come,” may not hold true.
It used to be that job growth attracts people to urban areas. But new research shows that people come first, then the jobs.
In “What Comes First, People or Jobs: Evidence and Lessons for Indiana,” the Center for Business and Economic Research at Ball State University provided the first study to look at the look-term differences between the questions: Do jobs move to people or do people move to jobs?
Researchers Michael J. Hicks and Dagney Faulk, directors of research at Ball State University, found that the movement of worker no longer has a statistical impact in influencing population shifts, and that jobs relocated to be near people rather than people relocating to be near jobs.
The clear message of the findings is that policies that focus on investing money to attractpeople to jobs is not the most effective way to grow an economy.
The economic models point to important features of the Indiana economy and have broad policy implications:
One important and strong result, which held in all but one of the studies, was that the forces that pulled jobs to populations was stronger than that which pulled population to employment. The overwhelming evidence from this body of research is that while both effects occur, the tendency for population growth to lead to job growth is far stronger than the impact of job growth on population.
In today’s mobile economy, attracting jobs does not attract people to a city or region, and through the last decade and a half, efforts to attract companies have not shown significant spike in economic growth in those regions, the research showed.
The study concluded that the most successful place spent the least in attracting businesses, but instead focused on improvements to quality of life and education.