Leadership

The Phantom Of The Opera: Cultural Amenities, Human Capital, And Regional Economic Growth

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Executive Summary

The authors analyze the extent to which endogenous cultural amenities affect the spatial equilibrium share of high-human-capital employees. To overcome endogeneity, they 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 amenities. Robustness tests confirm the strategy and strengthen the finding that proximity to a baroque opera house significantly affects the spatial equilibrium share of high-human-capital employees. Then, a cross-region growth regression shows that these employees induce local knowledge spillovers and shift a location to a higher growth path.

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