{"id":6012,"date":"2024-12-19T17:54:49","date_gmt":"2024-12-19T16:54:49","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=6012"},"modified":"2024-12-19T17:54:49","modified_gmt":"2024-12-19T16:54:49","slug":"the-decline-of-industrial-cities","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/12\/19\/the-decline-of-industrial-cities\/","title":{"rendered":"The Decline of Industrial Cities"},"content":{"rendered":"

Detroit, with its desperate decline, does not represent an inevitable fate for all former manufacturing cities. In Italy and around the world, there are examples of regions that, after the closure of large factories, have managed to transform and resume a path of development thanks to the establishment of new businesses. What they share is a common element: a high level of education among their residents.<\/span><\/i><\/p>\n

Over the past few decades, the economic landscape of Western countries has been extremely turbulent, with some arguing that the dramatic decline in manufacturing employment is one of the main causes of the significant social and political changes seen across various nations.<\/span><\/p>\n

This argument stems from the fact that manufacturing is geographically concentrated, so job losses have been particularly painful in areas that once hosted leading firms in the sector. Detroit in the United States, Middlesbrough in the United Kingdom, and Wuppertal in Germany are glaring examples of regions grappling with the repercussions of deindustrialization, where job losses are more widespread, and social challenges are more severe.<\/span><\/p>\n

Decline Is Not Universal<\/b><\/h3>\n

Responses to revitalize regions hit by deindustrialization have not been lacking. Italy launched “contratti d’area” in the late 1990s. The United Kingdom is currently engaged in a “levelling-up” program to stimulate investment and employment in northern England. Meanwhile, Germany, France, and the European Union spend billions of euros each year to support economically distressed communities. However, while it is clear that many local economies have been hit hard by deindustrialization, it is less clear whether the most prominent examples of urban decline\u2014Detroit and Middlesbrough\u2014are truly representative of the experiences of all cities that once had strong manufacturing bases.<\/span><\/p>\n

Local economies are not static entities; they are highly dynamic and, in some cases, capable of adapting to crises. A large body of literature has shown that deindustrialization generally has negative and persistent effects on local labor markets. Less attention, however, has been paid to the fact that these effects vary significantly across regions. In particular, few studies have explored the possibility that former manufacturing centers might recover successfully from the manufacturing sector\u2019s decline. Identifying the factors that increase the likelihood of recovery can help shape policies that are more likely to succeed in revitalizing struggling manufacturing cities.<\/span><\/p>\n

Every City, a Different Situation<\/b><\/h3>\n

A study I conducted with Luisa Gagliardi and Enrico Moretti covers six countries\u2014France, Germany, Italy, Japan, the United Kingdom, and the United States\u2014and reveals that the decline of manufacturing does not always lead to economic hardship. We studied 1,993 cities, analyzing how employment changed from each country\u2019s manufacturing peak until 2010. Our results show that not all cities fared poorly; in fact, 34% saw employment levels rise after manufacturing declined.<\/span><\/p>\n

Among the cities that performed better, the share of U.S. cities is the lowest. This means that communities in the Rust Belt\u2014the region between the northern Appalachians and the Great Lakes, once the heart of U.S. heavy industry\u2014emerged from the crisis relatively worse than similar regions in other countries. For instance, in Germany, nearly half of former manufacturing cities are recovering faster than the national average.<\/span><\/p>\n

In each country, there are examples of former manufacturing hubs that had similar employment levels at the start but took very different paths after the crisis. For Italy, we can look at Udine and Padua. In 1980, the peak year for manufacturing employment in the country, the two cities had similar shares of workers employed in manufacturing: 43% in Udine and 44% in Padua. Both are located in the Northeast, just over 150 kilometers apart. Yet, over the 30 years following 1980, employment growth rates were very different: in Udine, employment fell by an average of 3% per decade (more than the Italian average), while in Padua, employment grew by an average of 7% per decade, significantly outpacing the rest of the country. Notably, Padua hosts one of Italy\u2019s oldest and most prestigious universities, and in 1980, its share of university graduates was 7%, compared to 4% in Udine.<\/span><\/p>\n

In the United Kingdom, in 1970, Middlesbrough and Slough both had 44% of their residents employed in manufacturing. Over the next 40 years, their situations diverged: in Middlesbrough, employment fell by 17% per decade relative to the UK average, while in Slough, employment grew by 8% per decade.<\/span><\/p>\n

In the United States, Columbus and Toledo are both located in Ohio and, in 1970, had comparable shares of manufacturing employment: 35% in Columbus and 39% in Toledo. Since then, employment in Toledo fell by an average of 13% per decade relative to the U.S. average, while in Columbus, it grew by an average of 1% per decade. Once again, Columbus is home to Ohio State University, the state\u2019s flagship institution.<\/span><\/p>\n

Human Capital as a Key Factor<\/b><\/h3>\n

What factors explain the differences in local labor markets\u2019 ability to recover from the employment crisis triggered by the manufacturing sector\u2019s decline? In our research, we focused on the role of human capital, measured by the share of university graduates in each city during the peak year of manufacturing employment.<\/span><\/p>\n

The hypothesis is that cities with a more educated workforce are better equipped to recover from deindustrialization, as the presence of highly skilled workers can attract businesses from other sectors, offsetting job losses in manufacturing.<\/span><\/p>\n

A concrete example is Pittsburgh. Once a declining city, left behind by the heavy industry that employed its residents in the 1970s, Pittsburgh transformed into an innovation-driven economy in subsequent decades. The collapse of the steel, rail, and mining industries in the 1970s and 1980s led to the loss of one-third of its population. However, Pittsburgh also had major research institutions and a highly skilled workforce. After the decline of heavy manufacturing, the human capital of its residents enabled the city to shift to other sectors: higher education, medicine, green technology, and robotics. Google, Amazon, Apple, and Uber all have research centers in the city, and the region\u2019s per capita spending on research and development is two and a half times the U.S. average. Nationally, employment in human capital-intensive industries has grown significantly over the past 50 years, and Pittsburgh, with its strong skills base, capitalized on this growth, offsetting job losses in manufacturing.<\/span><\/p>\n

Of course, it is difficult to generalize from a single example. Pittsburgh is not a typical former manufacturing hub, Carnegie Mellon University is not just any university, and Pennsylvania\u2019s unique economic policies may have played a role in the city\u2019s recovery.<\/span><\/p>\n

Nevertheless, our estimates suggest that Pittsburgh is not an exception. On average, cities with a higher share of university-educated residents experienced faster employment growth in the post-manufacturing era (as seen in Padua). The share of graduates became a crucial factor during deindustrialization, enabling a shift toward human capital-intensive sectors. Cities with a strong skills base, anchored by universities, attracted businesses in sectors such as finance, telecommunications, and research and development, thereby compensating for manufacturing job losses.<\/span><\/p>\n

Our results highlight that investing in human capital, particularly through local universities, is a powerful tool for transforming a local economy. Current policies predominantly subsidize physical capital, but an “industrial policy” focused on education investment may offer better solutions for cities that were once manufacturing powerhouses.<\/span><\/p>\n

Michel Serafinelli is Professor of Political Economy at King\u2019s Business School, King\u2019s College London. His research focuses on the causes and consequences of regional differences in labor markets, with an emphasis on deindustrialization and the green transition.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Detroit, with its desperate decline, does not represent an inevitable fate for all former manufacturing cities. In Italy and around the world, there are examples […]<\/p>\n","protected":false},"author":9579,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"coauthors":[236],"class_list":["post-6012","post","type-post","status-publish","format-standard","hentry","category-non-categorizzato"],"acf":[],"yoast_head":"\nThe Decline of Industrial Cities - Rivista Eco<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.rivistaeco.com\/en\/2024\/12\/19\/the-decline-of-industrial-cities\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Decline of Industrial Cities - Rivista Eco\" \/>\n<meta property=\"og:description\" content=\"Detroit, with its desperate decline, does not represent an inevitable fate for all former manufacturing cities. 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