The hard and soft side of European knowledge regions Bart Sleutjes HIGHER EDUCATED LOCATION PREFERENCES (HELP-UVA VU) REPORT NR. 1 Index 1. Introduction to Higher Educated Location Preferences (HELP) 3 2. Knowledge cities and residential preferences: a literature review 7 3. Metropolitan Region Amsterdam: diversity 28 4. Eindhoven: the national ‘Brainport’ of the Netherlands 62 5. Copenhagen Capital Region: The ‘Human Capital’ 89 6. Helsinki Metropolitan Area: the ‘Finnish Miracle’ 115 7. Conclusions 140 Summary in Dutch 146 References 152 2 The hard and soft side of European knowledge regions 1. Introduction to Higher Educated Location Preferences (HELP) 1.1 Background of the HELP-project This report contains the end results of the first work package of the Higher Educated Location Preferences (HELP) project, which is part of NWO’s Urban Regions in the Delta programme. In this project, the preferences and behaviour with respect to the residential location of highly educated workers, or knowledge workers, will be analyzed. The attractiveness of cities to these workers is widely regarded as a key factor for the flourishing and growth of urban areas in the coming dec- ades. Urban regions are regarded crucial for the economy, since high density facilitates the interaction between economic actors. Despite decreasing transportation costs and the rise of ICT, the role of cities has not diminished. Rather, E-mail and mobile telecommunication are complementary, ra- ther than a substitute to face-to-face contacts. The importance of cities lies both in the field of Pecuniary externalities, as was stressed in Krugman’s (1991) core-periphery model, and in their possibilities for formal and informal personal contacts between workers. The current economy is characterized by a high degree of globalization and a strong emphasis on human capital. Highly educated workers play a key role in this knowledge economy, and since the knowledge-intensive and often highly specialized jobs they qualify for are only available in a small number of larger cities, knowledge workers tend to be more mobile than others. Strategies to attract and retain these workers are therefore of crucial importance for cities’ competitiveness (Ter Weel et al., 2010). In this respect, high value is attached to the quality of urban areas as places to work, live and recreate. Although their job is of primal importance for present-day workers, they also tend to have clear preferences with respect to other aspects of life. These concern not only the quality of the house and the accessibility of employment from its location, but also the characteristics of the neighbourhood, such as safety and the identity of place, the presence of shops and recreational facilities. Highly educated workers are believed to have relatively strong preferences for urban amenities, such as a diversified supply of restaurants, theatres and concert halls. Recent research by the Netherlands Bureau for Economic Policy (De Groot et al., 2010) has shown that the market area of these amenities is typically much smaller than spatial labour market areas, which explains the much higher level of house prices in neighbourhoods with good accessibility to concentrations of consumer amenities. The price differences indicate the importance attached to them, but high house prices also signal scarcity and cause workers to look for other places to live. Although the supply of land is limited in any urban area, there are many different ways in which it can be used. Real estate is an extremely durable commodity and decisions taken now can have consequences for decades. The strong relationship between skills and flourishing cities makes it important that The hard and soft side of European knowledge regions 3 urban land use policies keep a clear eye on the consequences of current measures for the present and future inhabitants of the city. Urban amenities are also important for facilitating the face-to-face contacts that are considered important for modern societies. Interactions between skilled and creative people appear to be crucial for continued economic growth in a dynamic setting in which today’s production techniques may be outdated tomorrow (Storper & Venables, 2004) and cities regularly have to ‘reinvent’ themselves to continue their existence (Bontje et al., 2011). Therefore, the main issue to be addressed in this research project is: “How can we keep our cities pleasant and productive places in the near and further future?” In order to answer this main re- search question, the project is split up in four parts: I) A meta-analysis of the role of knowledge and skills in urban development that uses the US and European literature as a background, aims at policy relevance for the Netherlands and Europe and concentrates on four city-regions: Helsinki, Copenhagen, Amsterdam en Eindhoven. Expert knowledge from these city-regions will be used through the involvement of local stakeholders. II) An extensive stated choice study that focuses on the preferences of highly educated Dutch workers with respect to residential location, paying special attention on urban amenities. The focus on highly educated workers implies also an interest in the differ- ences between their preferences and those of other workers. This study will be done in the city-regions of Amsterdam and Eindhoven and be compared to similar research outcomes from Helsinki. III) The development of a model structure that can be used to analyse actual choice be- haviour of workers in various urban areas. The model will be applied to the Nether- lands as a whole, using municipalities as the basic geographical area, and to three specific urban areas, Amsterdam, Eindhoven and Copenhagen, using smaller spatial entities. IV) The project will culminate in the development of final versions of the models that in- tegrate results from stated choices as well as revealed preferences studies, and their use in the analysis of a series of policy scenarios that will be formulated in discussions with local stakeholders. Dissemination of the results will be facilitated by the use of GIS and a connection with the Land Use Scanner. The ultimate product of the re- search can be used as a decision support system for ‘gebiedsontwikkeling’. The remainder of this report will deal with the first part of the project. 1.2 Introduction to the first work package: meta-analysis Urban economists have always understood cities as concentrations of jobs, but the interest in cities as concentrations of consumer amenities is of a more recent date, the important early work of Christaller and Lösch notwithstanding. The importance of the subject is generally recognised in the US (e.g., Glaeser et al., 2001), but the phenomenon does not seem to be of less importance in Europe. One of the reasons why highly educated workers play a key role in economic and urban development is that they may be more mobile than others, though evidence for this so far comes mainly from the US and not from Europe. They can choose a different city in the same country, but the possibility to move to a different country, in Europe or even in another continent, be- comes increasingly relevant. As mentioned before, highly specialized skilled jobs may only be located in a limited amount of locations per country, most often in or near the largest cities. The direct competitors of Amsterdam and Eindhoven in knowledge-intensive sectors are probably ra- 4 The hard and soft side of European knowledge regions ther foreign cities than other Dutch cities. It is therefore important to investigate the preference for Dutch cities in comparison to relevant alternatives in other countries and also here stated choice techniques provide a useful addition to information about actual migration behaviour. The international perspective is of key importance here. It is mainly for this reason that the project will start with a comparative study of urban develop- ment in European cities. The first work package, which is central in this report, involved a general meta-analysis that sketches the main insights from the existing literature, while paying special attention to Helsinki, Copenhagen, Amsterdam and Eindhoven. This meta-analysis consists of a general literature review of national and international literature on knowledge workers’ residential preferences, as well as a descriptive study of the project’s four case studies: Amsterdam, Eindho- ven, Copenhagen and Helsinki, respectively. The existing international literature, in which the US also figures prominently, will serve as a useful background, but a major purpose of this exercise is to get insights into the strengths and weaknesses of European cities. Particular attention will be paid to the role of historical and cultural amenities that are considered a main resource for Euro- pean urban policy. This descriptive study has been based on existing literature on the regions’ strengths and weaknesses as knowledge cities, their current economic profile and, insofar availa- ble, findings from previous studies on the residential preferences of knowledge workers in the respective city regions. In addition, detailed information on the city regions’ strengths and weak- nesses as knowledge cities has been gathered through 22 in-depth interviews with local experts in the four case study regions. The choice for Amsterdam. Eindhoven, Copenhagen and Helsinki as case studies was based on their similarities. In all these four city regions, human capital is an important driver of the local economy and natural amenities (like a subtropical climate) do not play an important role. All four cities have flourished in the 1990s and early 2000s. Eindhoven differs from the other three cities in a number of aspects. Whereas the other three cities have a comparable size (around 600,000 to 700,000 inhabitants) and are the largest cities in their respective countries, Eindhoven is much smaller with only 220,000 inhabitants and is the fifth city of The Netherlands.