College Towns Have Had Their Fun

As economists look for models that could reverse the fortunes of stagnating parts of the country, one cause for optimism has been college towns, which have thrived despite being neither wealthy coastal metropolises nor booming Sun Belt cities. The problem is that the common thread among those towns is … colleges. And demographic and labor-market forces have peaked in higher education.

The appeal of the college town model is understandable. As a recent Wall Street Journal article notes, since 2000, the median unemployment rate in counties with flagship land-grant universities has been 1.2 percent lower than in other counties. For communities that aren't blessed with the robust infrastructure and deep talent pools of large cities, higher ed institutions represent a robust source of economic demand that isn't dependent on manufacturing or the business cycle. It's also a way to ensure a steady stream of young people, fighting some of the demographic pressures as the rest of small-town America ages.