The Opera House Effect
Urban and regional economic development, which focused on attracting factories and companies not too long ago, has taken a bit of artistic turn in recent years, with mayors, chambers of commerce and economic developers lauding the arts as a key factor in attracting skilled workers.
Art and culture's role in urban development is well-documented. University of Minnesota economist Ann Markusen and her colleagues argue that the arts make substantial, if occasionally hidden, contributions to regional development. Markusen dubs this the "artistic dividend."
Cultural amenities in general play a role in city growth, according to research by Harvard economist Edward Glaeser and his collaborators. Sociologists Terry Nichols Clark, Dan Silver and Lawrence Rothfield have been documenting the importance of artistic and cultural scenes in attracting talent and spurring urban growth. My own research highlights the importance of street-level artistic and creative scenes, even more so than the high arts, in making cities more attractive, energized and diverse.
However, critics counter that arts are more icing then cake. Arts boosterism, they contend, falls victim to a fatal "chicken and egg problem" – arts and culture tend to develop only after cities get rich.
A new study, "The Phantom of the Opera: Cultural Amenities, Human Capital, and Regional Economic Growth," published in the journal Labour Economics, sheds additional light on this conundrum by examining the effect the location of 17th and 18th century German opera houses has on attracting talent and spurring economic growth in later periods.
During the Baroque era, the authors explain, "absolutistic courts and churches competed with each other for musical talent. … Thuringia alone, where the composer J.S. Bach grew up, contained 22 separate courts. Music was so highly regarded that 'every local court worth its salt had its own orchestra or band (Kapelle or Harmonie), and the more affluent courts maintained opera houses.'" They go on to point out that "the presence of one of these opera houses does not necessarily mean that the surrounding region was wealthy and prosperous enough to afford it; very often the rulers incurred vast debt and engaged in deficit spending in their quest for grandeur." The construction of these opera houses predates the rise of the well-paid, skilled workers and bourgeoisie who powered later economic growth. For these reasons, the location of these Baroque opera houses provides an intriguing "natural experiment" because they can be considered as "exogenous to the distribution of high human capital employees that originates from the period of and after the Industrial Revolution."
Baroque opera houses, they found, have a strong relationship to a region’s later ability to attract high skilled talent and to grow. "Proximity to a baroque opera house is a strong predictor of a region’s equilibrium share of high-human-capital-employees," they write. The opera houses and the cultural amenity they provide came well before the jobs, in this case by centuries. They further note that "it is the local level of high-human-capital employees who value their proximity to a baroque opera house that shifts a location to a higher growth path." In other words, the talented, skilled high human capital people who locate in places that boast Baroque opera houses are the sources of measurable economic growth.
This study gets us closer to resolving the chicken and egg problem. Arts and culture are much more than icing on the cake: as this study shows, they really can make a difference in talent attraction and economic growth.