Most countries make sustained economic growth a principal policy objective. While many factors contribute to growth, economists believe that educating workers plays a critical role. Individuals invest in education because of the expected benefits to themselves or their children, such as higher earnings. But such private investment can increase the productivity of others as well. For example, the collaborative effort of many educated workers in a common enterprise may lead to invention and innovation that sustains the growth of the enterprise. Some economists believe there is an important link between national economic growth and the concentration of more highly educated people in cities.1 These economists argue that the knowledge spillovers associated with increased education can actually serve as an engine of growth for local and national economies. They also argue that the concentration of people in cities enhances these spillovers by creating an environment in which ideas flow quickly amid face-to-face contact. 

This article appeared in the Fourth Quarter 2014 edition of Business Review. Download and read the full issue.

[1]Unless otherwise indicated, city and metropolitan area are being used to designate a metropolitan statistical area (MSA), which is a geographic area delineated by the U.S. Office of Management and Budget that combines a densely populated nucleus with adjacent communities that have a high degree of economic integration with the nucleus.