The phantom of the opera: Cultural amenities, human capital, and regional economic growth

• Published in: Labour economics Vol. 18; no. 6; pp. 755 - 766
• Main Authors: Falck, Oliver, Fritsch, Michael, Heblich, Stephan
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01-12-2011; Elsevier; Elsevier Science Ltd
• Series: Labour Economics
• Subjects: Baroque era; Bohemians; Cultural amenities; Cultural amenities Regional economic growth Human capital Bohemians; Culture; Economic growth; Employees; Human capital; Opera; Opera companies; Regional economic growth; Studies; Germany; R11; Human capital; H41; Cultural amenities; Bohemians; J24; Regional economic growth
• ISSN: 0927-5371; 1879-1034
• DOI: 10.1016/j.labeco.2011.06.004

We analyze the extent to which endogenous cultural amenities affect the spatial equilibrium share of high-human-capital employees. To overcome endogeneity, we draw on a quasi-natural experiment in German history and exploit the exogenous spatial distribution of baroque opera houses built as a part of rulers' competition for prestigious cultural sights. Robustness tests confirm our strategy and strengthen the finding that proximity to a baroque opera house significantly affects the spatial equilibrium share of high-human-capital employees. A cross-region growth regression shows that these employees induce local knowledge spillovers and shift a location to a higher growth path.
► The study examines 29 opera houses built before 1800. ► Baroque opera houses are not theresult but a cause of regional economic growth. ► Well-educated workers prefer to live geographically close to cultural amenities. ► Proximity to cultural amenities can significantly increase regional growth. ► Political leaders should account for the indirect growth effect of cultural amenities.