Opera: The Economic Stimulus That Lasts for Centuries
Building an opera house to stimulate an economy may be an odd idea -- though not necessarily a bad one. In fact, more than 200 years after they were built, opera houses in Germany may still be helping their local economies.
That's the conclusion of a new study by economists in Germany and the U.K. that found that cultural amenities such as a place to enjoy Wagner's Ring Cycle are an important component in decisions by high-skilled workers about where to live.
Clusters of skilled workers also have positive knock-on effects on the local economy because their productivity tends to increase the output of companies, boosting the efficiency and wages of less-skilled local employees, the authors said.
"Innovators can foster each other's creative spirit, learn from each other and become overall more productive," said the paper, published by the Center for Economic Studies and Ifo Institute, Germany-based research organizations. "This implies that once a city attracts some innovative workers and companies, its economy may change in ways that make it even more attractive to other innovators."
The economists studied 36 years of wage data in Germany and zeroed in on the baroque opera houses, built before 1800, which dot the country.
They found that workers with high skills were drawn to such facilities. Furthermore, they estimated a 1 percentage-point increase in the share of high-skilled workers caused their wages to rise 1.1 percent and those of colleagues with few skills to increase by 1.4 percent.
The findings square with a 2013 McKinsey & Co. study of Germany which found high-skilled people named "cultural offerings and an interesting cultural scene" among the top five reasons for their location out of 15 possible choices.
"Our results suggest that 'music in the air' does indeed pay off for a location," wrote the authors of the CES-Ifo paper.
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