The New Geography of Jobs by Enrico Moretti

Last updated: Sep 30, 2023

Summary of The New Geography of Jobs by Enrico Moretti

The New Geography of Jobs by Enrico Moretti is a comprehensive analysis of the changing dynamics of the job market in the United States. Moretti argues that the traditional model of economic growth, which focused on attracting large corporations and industries to a specific region, is no longer effective in today's globalized economy.

According to Moretti, the key driver of economic growth and job creation is innovation. He explains that cities and regions that are able to foster innovation and attract highly skilled workers are the ones that will thrive in the new economy. These cities, which Moretti refers to as "innovation hubs," have a higher concentration of knowledge-intensive industries such as technology, finance, and healthcare.

One of the main factors that determine the success of an innovation hub is the presence of a strong research university. Moretti argues that research universities play a crucial role in driving innovation and attracting talent to a region. They act as a magnet for highly skilled workers and provide the necessary infrastructure for collaboration between academia and industry.

Another important factor highlighted by Moretti is the role of human capital. He explains that cities with a higher percentage of college-educated workers tend to have higher wages and lower unemployment rates. This is because highly skilled workers are more productive and can adapt to new technologies and industries more easily.

Moretti also discusses the concept of "spillover effects" in the job market. He explains that when a new job is created in an innovation hub, it leads to the creation of additional jobs in related industries. For example, the presence of a technology company can lead to the growth of other businesses such as restaurants, retail stores, and real estate.

However, Moretti also acknowledges that not all regions can become successful innovation hubs. He argues that there is a growing divide between cities that are able to adapt to the new economy and those that are left behind. This divide is driven by factors such as historical legacies, infrastructure, and the ability to attract and retain talent.

In conclusion, The New Geography of Jobs provides a comprehensive analysis of the changing dynamics of the job market in the United States. Moretti argues that innovation and human capital are the key drivers of economic growth and job creation. He emphasizes the importance of research universities and the presence of highly skilled workers in creating successful innovation hubs. However, he also acknowledges the growing divide between cities that are able to adapt to the new economy and those that are left behind.

1. The Shift in Job Opportunities

In "The New Geography of Jobs," Enrico Moretti explores the changing landscape of job opportunities in the United States. He argues that there has been a significant shift in the types of jobs available, with a growing concentration of high-skilled, high-paying jobs in certain cities and regions. This shift has led to increased inequality and a widening gap between prosperous and struggling areas.

Moretti explains that this shift is driven by the clustering effect, where industries and workers are drawn to areas with a high concentration of similar businesses and talent. This clustering effect creates a positive feedback loop, as the presence of skilled workers attracts more businesses, which in turn attracts more skilled workers. As a result, cities like San Francisco, Seattle, and Boston have become hubs for innovation and high-tech industries, while other areas have struggled to keep up.

2. The Importance of Human Capital

One of the key takeaways from Moretti's book is the importance of human capital in driving economic growth. He argues that cities and regions with a highly educated and skilled workforce are more likely to attract high-paying jobs and experience long-term prosperity. This is because skilled workers are more productive and innovative, leading to higher levels of economic output.

Moretti emphasizes the need for investment in education and training to develop human capital. He suggests that policymakers should focus on improving educational opportunities and providing support for workers to acquire new skills. By doing so, cities and regions can attract high-skilled industries and create a virtuous cycle of economic growth.

3. The Role of Innovation

Innovation plays a crucial role in driving economic growth and job creation, according to Moretti. He argues that cities and regions that foster a culture of innovation are more likely to attract high-skilled industries and experience long-term prosperity. This is because innovation leads to the development of new products, services, and industries, which in turn create new job opportunities.

Moretti suggests that policymakers should focus on creating an environment that encourages innovation, such as investing in research and development, supporting entrepreneurship, and fostering collaboration between businesses, universities, and research institutions. By doing so, cities and regions can become hubs for innovation and attract high-skilled workers and industries.

4. The Impact of Spillover Effects

Moretti highlights the importance of spillover effects in driving regional economic growth. Spillover effects occur when the presence of a successful industry or business leads to the development of related industries and businesses in the same region. This creates a multiplier effect, where the initial industry or business generates additional job opportunities and economic activity.

Moretti argues that policymakers should focus on supporting industries and businesses that have strong spillover effects. By doing so, cities and regions can create a diverse and interconnected economy that is more resilient to economic shocks and downturns.

5. The Role of Infrastructure

Infrastructure plays a crucial role in attracting businesses and driving economic growth, according to Moretti. He argues that cities and regions with modern and efficient infrastructure are more likely to attract high-skilled industries and experience long-term prosperity. This is because infrastructure, such as transportation networks and broadband internet, enables businesses to connect with customers and suppliers more easily.

Moretti suggests that policymakers should prioritize investments in infrastructure to support economic growth. This includes improving transportation networks, expanding broadband access, and investing in research and development facilities. By doing so, cities and regions can create a competitive advantage and attract high-skilled industries.

6. The Importance of Collaboration

Collaboration between businesses, universities, and research institutions is crucial for driving innovation and economic growth, according to Moretti. He argues that cities and regions that foster collaboration are more likely to attract high-skilled industries and experience long-term prosperity. This is because collaboration allows for the exchange of knowledge, ideas, and resources, leading to the development of new products, services, and industries.

Moretti suggests that policymakers should focus on creating an environment that encourages collaboration. This includes supporting research and development initiatives, promoting partnerships between businesses and universities, and providing incentives for knowledge-sharing. By doing so, cities and regions can become hubs for innovation and attract high-skilled workers and industries.

7. The Importance of Quality of Life

Quality of life plays a significant role in attracting high-skilled workers and industries, according to Moretti. He argues that cities and regions that offer a high quality of life, including amenities, cultural attractions, and a vibrant social scene, are more likely to attract and retain talent. This is because high-skilled workers are more likely to choose locations that offer a desirable lifestyle.

Moretti suggests that policymakers should focus on improving the quality of life in their cities and regions. This includes investing in cultural and recreational facilities, improving public transportation, and creating vibrant and inclusive communities. By doing so, cities and regions can attract high-skilled workers and industries, leading to long-term prosperity.

8. The Need for Regional Policy

Moretti argues that regional policy is crucial for addressing the growing inequality between prosperous and struggling areas. He suggests that policymakers should focus on implementing targeted policies that support struggling areas and help them attract high-skilled industries. This includes investing in education and training, improving infrastructure, and fostering collaboration between businesses, universities, and research institutions.

Moretti emphasizes the need for a comprehensive and coordinated approach to regional policy, where different levels of government work together to address the unique challenges and opportunities of each region. By doing so, policymakers can create a more equitable and prosperous economy that benefits all areas of the country.