Economic Growth and Urban Planning - An Econometric Analysis of Business Location Decisions and Labour Force Characteristics

There are many ways in which regions can increase their labour force competitiveness and in doing so spur growth. This paper's examination of selected industries within U.S. zip codes suggests that there is a relationship between increasing the amount of highly educated residents and physical establishment growth in an area.

With the decline of North American manufacturing in recent decades, "high quality" labour has become the major driver of economic growth. Numerous economic and planning theories have been put forward based on this notion, predicting that today's regional economic growth is driven by retaining certain demographics of high quality labour. This paper compares two ways of measuring labour quality as a factor in business location decisions: human capital (educational attainment) and essential growth occupations (as a proxy for work experience), as put forward by academics and researchers such as Edward Glaeser and Richard Florida.

The purpose of this paper is to apply fixed effects and first differences econometric models to panel data, to determine whether human capital or essential growth occupations influence the location of establishments within selected knowledge industries. U.S. zip code data for the years 2000 and 2010 is used for the primary analysis in this paper.

The results within this paper have revealed that increasing regional education is an attractive and obtainable strategy for economic development. As demonstrated throughout this paper, there are results indicating that increasing regional education rather than increasing selected essential growth occupations could have a significant impact on increasing growth within the industries that have been targeted as the drivers of today's North American economy.