Historical Place-Based Investments and Contemporary Economic Mobility and Inequality: Impacts of University Establishment

Abstract

We explore how historic university establishment has impacted contemporary county-level economic mobility and inequality outcomes using site-selection natural experiments. We find that universities have led to greater mid-life upward intergenerational income mobility and more income inequality. We highlight five channels through which these effects operate: sorting of highachieving households into university counties; a “hollowing-out” of local labor markets which has provided opportunities to achieve top incomes as well as increased inequality; increased educational attainment across the income distribution, greater innovative activity, and higher levels of social capital.