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Economic Forum Focuses on Importance of “Human Capital” September 14, 2009

Economic Forum Focuses on Importance of “Human Capital”

Sustaining and advancing New York’s “human capital” is critical to the state’s efforts to recover from the current recession and compete in the global economy, according to experts who spoke at a Sept. 14 New York State Network for Economic Research (NYSNER) forum held at the Rockefeller Institute.

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Keynote speaker Isaac Ehrlich — chair of the Department of Economics at the University at Buffalo and editor of the University of Chicago Press’ Journal of Human Capital — said every effort must be made to continue investing in the state’s human capital, not only to help speed economic recovery but to help the nation maintain its worldwide economic leadership position.

“Beginning in the mid-1800s, the United States has taken over from the United Kingdom in terms of leading in economic growth across the world,” Ehrlich said. “The reason for our dominance is we invented high school …we also invented public higher education.

“We have even encouraged the immigration of skilled people. We have formed a base of human capital, nurtured it and now we actually export it.”

Professor Ehrlich stressed that human capital is key to the state’s future because of its special role in the global information economy. He said that as state officials make difficult budget decisions, they must make selective cuts so the state can continue to bolster research universities and retain human capital. At the same time, state and national policymakers must maintain flexible and adaptable markets, he said.

Jaison R. Abel, of the Federal Reserve Bank of New York, explained the relationship of higher education to sustained and growing economic activity in different metropolitan regions of the state.

“Regional economic studies have linked higher levels of human capital to increases in employment and population growth, wages and housing prices,” he said. “In addition, the geographic concentration of human capital facilitates knowledge spillovers, which further enhance regional productivity, fuel innovation and promote growth.”

Donald J. Boyd, a senior fellow at the Rockefeller Institute, examined state and local government employment levels in the wake of the recession. Private-sector employment in the state dropped by 2.8 percent over the year ending in July 2009, while state government jobs declined 2.1 percent and local government — including public schools — increased employment by 1.3 percent.

“While state and local job levels have been more resilient than the private sector during the first eight months of the recession, cuts are underway,” he said. “We have seen state and local job declines beginning in August 2008, and they have accelerated recently.”

Boyd explained that the reasons for resiliency in state and local employment, despite the recession, include the critical services provided by those governments, political strength of unions and multiyear labor contracts or contractual rules.

John Porter, associate provost for institutional research and enrollment planning at the State University of New York, analyzed higher-education enrollment trends during recessions. New York State’s funding of four-year SUNY campuses is not tied to enrollment, and thus may discourage campuses from admitting additional students during difficult economic periods, he said.

Other speakers included James Parrott of the Fiscal Policy Institute, Thomas Conoscenti of New York University and Eamon Moynihan of the Cost of Living Project. Irene Lurie of the Rockefeller Institute and Laura Anglin of the Commission on Independent Colleges and Universities also participated as panel discussants.



The Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York, conducts fiscal and programmatic research on American state and local governments. It works closely with federal, state, and local government agencies nationally and in New York, and draws on the State University’s rich intellectual resources and on networks of public policy academic experts throughout the country.