Can colleges create prosperous communities?

Executive Summary

Colleges and universities increasingly are viewed as engines of economic growth – and measured against their ability to fulfill that role. The trend is intimately bound up with the shift, in the United States and most other developed nations, toward a knowledge-based economy. Colleges and universities boost local economies by providing jobs, a spending stream for goods and services and a supply of skilled graduates. Experts say communities with universities are better able to pivot away from declining industries toward expanding ones, and many urban institutions are working with local partners to revitalize neighborhoods. Yet economists caution that some universities habitually oversell their economic impact. And critics say the institutions could be doing much more to combat poverty, improve public schools and increase the supply of affordable housing.

Here are some key takeaways:

  • Between 1950 and 2010, doubling the number of universities in a region was associated with a 4 percent increase in the region’s gross domestic product.

  • One study found that each new patent issued to a university increased local employment by 15 percent.

  • At the same time, U.S. college enrollment is declining, and a recent report said that one-third of all small and midsized colleges are in financial difficulty.

Resources for Further Study



Berman, Elizabeth Popp, “Creating the Market University: How Academic Science Became an Economic Engine,” Princeton University Press, 2012. A sociologist explores how the federal government encouraged academic science to make a dramatic move toward the market.

Dorn, Charles, “For the Common Good: A New History of Higher Education in America,” Cornell University Press, 2017. A Bowdoin College education professor traces the history of colleges and universities and their contributions to the common good.

Geiger, Roger L., “The History of American Higher Education: Learning and Culture From the Founding to World War II,” Princeton University Press, 2015. An expert on higher education examines its evolution from colonial times to World War II.


Davis, Bob, “There’s an Antidote to America’s Long Economic Malaise: College Towns,” The Wall Street Journal, Dec. 12, 2016, Colleges have helped communities recover from the 2007–2009 recession.

Fischer, Karin, “Why Universities Alone Aren’t Going to Save Your Economy,” The Chronicle of Higher Education, April 6, 2015, Not all cities can capitalize on the presence of a research university nearby to spur economic growth.

Herstik, Lauren, “U.S.C. Expands in a ‘Neglected’ Neighborhood, Promising Jobs and More,” The New York Times, Aug. 15, 2017, The University of Southern California’s new campus in South Los Angeles has created local jobs and brought new retailers to an underserved neighborhood.

Seltzer, Rick, “Healthier Than Imagined?” Inside Higher Ed, Aug. 14, 2017, Private colleges are financially healthier than they were during the recession, but the smallest continue to struggle.

Wells, Carrie, “Maryland universities ramp up efforts to help students, faculty create companies,” The Washington Post, March 26, 2016, Johns Hopkins University and the University System of Maryland are adopting strategies to increase the commercialization of faculty research.

Reports and Studies

Andes, Scott, et al., “Capturing the next economy: Pittsburgh’s rise as a global innovation city,” Brookings Institution, Sept. 2017, Pittsburgh’s advanced industries and world-class universities have turned it into a leader in innovation, but job growth has not followed, according to a report by scholars at the Brookings Institution, a Washington think tank.

Caulfield, Timothy, and Ubaka Ogbogu, “The commercialization of university-based research: Balancing risks and benefits,” BMC Medical Ethics, Oct. 14, 2015, Emphasizing commercialization of university research can have unintended consequences, such as increased secrecy, according to two scholars at the University of Alberta.

Christophersen, Kjell, Tim Nadreau and Aaron Olanie, “The Rights and Wrongs of Economic Impact Analysis for Colleges and Universities,” Emsi, Jan. 7, 2014, Colleges and universities sometimes exaggerate their economic impact on their communities, write three economists at Emsi, an economic research firm.

DeVol, Ross, Joe Lee and Minoli Ratnatunga, “Concept to Commercialization: The Best Universities for Technology Transfer,” Milken Institute, April 2017, Researchers at the Milken Institute, a think tank that focuses on finance and the economy, rank universities based on how well they generate patents, licensing fees and start-ups per research dollar.

Scrivener, Susan, et al., “Doubling Graduation Rates: Three-Year Effects of CUNY’s Accelerated Study in Associate Programs (ASAP) for Developmental Education Students,” MDRC, February 2015, A comprehensive program of financial aid and intensive support services doubled graduation rates for community college students, a study by the education and policy research organization MDRC found.

The Next Step

Community Colleges

Long, Katherine, “Washington’s Running Start program a national standout, study says,” The Seattle Times, Oct. 6, 2017, High school students who participate in Running Start, a dual-credit program at Washington state community colleges, graduate from college at higher rates than the national average, a study finds.

Salgado, Juan, “When Community College Is Free,” The New York Times, Sept. 19, 2017, An experiment in Chicago where free community college was offered to students with high GPAs saw high graduation and retention rates, says the chancellor of the City Colleges of Chicago.

Smith, Ashley A., “Free Impact on N.Y. Community Colleges,” Inside Higher Ed, Oct. 13, 2017, Early signs indicate that New York state’s free public college tuition program is encouraging more full-time enrollment at community colleges.

Emerging Cities

Finegold, David, “Pittsburgh: A big college town full of creativity,” Pittsburgh Post-Gazette, Oct. 13, 2017, Pittsburgh universities employ more than 20 percent of the city’s population and boast diversified higher education programs, says Chatham University’s president.

Scribner, Herb, “Is Provo one of the country’s best college towns? Yes, and here’s why,” Deseret News, Sept. 14, 2017, Provo, Utah, ranked third in 24/7 Wall Street’s recent listing of the best college cities to live in because of its highly educated population.

Young, Aaron, “Report: Ames is one of the ‘best college towns’ in America,” The Des Moines Register, Sept. 19, 2017, A thriving economy and downtown helped land Ames, Iowa, on the list of the 10 best college towns in America.

International Students

Krantz, Laura, “Increasingly, foreign students are choosing Canada over US,” Boston Globe, Sept. 16, 2017, The United States, which usually is the top destination for foreign students attending college abroad, is losing a record number of students to Canada in the wake of President Trump’s election.

Schaffhauser, Dian, “U.S. Colleges Face Potential Loss of $250 Million from Drop in International Enrollments,” Campus Technology, May 15, 2017, U.S. colleges and universities could lose millions of dollars if international student enrollment drops by 5 percent, warns a researcher from DrEducation, a firm that monitors international student trends.

Tausche, Kayla, and Stephanie Dhue, “US business schools are struggling to recruit international candidates,” CNBC, Sept. 19, 2017, Anxiety about the availability of H-1B visas and the current political climate has dissuaded many international students from applying to U.S. business schools for the 2017–18 academic year.

University of California System

“UC campuses among the greenest in the country,” University of California, Aug. 28, 2017, In Sierra Magazine’s analysis of 227 school in the United States and Canada, seven University of California branches are among the top 50 for most sustainable, and the Irvine campus was in the top 10.

Lee, Steve, “UC San Diego unveils Mesa Nueva: One of the nation’s largest graduate housing communities,” LGBT Weekly, Sept. 24, 2017, A new graduate housing community at UC, San Diego, seeks to lessen the impact of the growing student population on the city’s parking, traffic and housing.

Leonard, James, “Economic impact of UC Merced rises to $2.6B,” University of California, Jan. 3, 2017, The UC Merced campus has contributed more than $1.4 billion to the San Joaquin Valley’s economy and $2.6 billion to the state economy, according to the university’s annual economic impact report.


Association of Public and Land-Grant Universities
1307 New York Ave., N.W., Suite 400, Washington, DC 20005
Association of 237 public research universities, land-grant institutions and affiliated organizations that advocates on their behalf.

Association of University Technology Managers
529 14th St., N.W., Suite 750, Washington, DC 20045
Association of more than 3,200 university technology managers that promotes the commercialization of university research.

Brookings Institution
1775 Massachusetts Ave., N.W., Washington, DC 20036
Public policy organization that conducts research on local, national and global issues, including local economic development.

Community College Research Center (Columbia University)
525 W. 120th St., New York, NY 10027
Research center that assess the problems and performance of community colleges.

Lincoln Institute of Land Policy
113 Brattle St., Cambridge, MA 02138
Foundation that researches and promotes policies for the effective use, taxation and stewardship of land.

Milken Institute
1250 Fourth St., Santa Monica, CA 90401
Think tank that focuses on finance and the economy.

National Student Clearinghouse Research Center
2300 Dulles Station Blvd., Suite 300, Herndon, VA 20171
Research organization that collects and processes educational data.

DOI: 10.1177/237455680332.n1