Flight Of Creative Class From Cool Cities

The Great Reset has turned talent migration on its head. A new geography of winners and losers is emerging, right under the noses of experts. The leading edge of change can be found in China:

Recently, many Chinese youth have left the country's first-tier cities, such as Beijing, Shanghai and Guangzhou, after several years of hard work to pursue careers in second-tier and third-tier cities.

This new trend has been described by media as a "flight" from first-tier cities. Although the number of young workers who have chosen to leave is relatively small, this phenomenon marks a sharp reversal in the flow of talent over past years.

Ren Yuan, a professor at the Institute of Population Research under Fudan University, said the overly high livings costs and growing competitive pressure in first-tier cities have resulted in the worsening of these cities' living and working environments and a decline in young people's happiness, so it is natural for some people to flee from these cities.

The trend is counter to the Creative Class migration made famous by Richard Florida. During the last round of globalization, agglomeration economies acted as a good predictor of where talent moved. The costs of high density living didn't seem to deter college graduates from moving to places such as New York and San Francisco. At least, the biggest cities attracted the most brains.

The rise of second-tier and third-tier cities in China is not a new story. I'm still touting the David Dollar article in Newsweek, published in 2006. The passage that illuminates the economic geography:

Being near the coast is a help in China, because of access to external ideas and because coastal areas were permitted to experiment with reform first. An intriguing pattern is that governance is best in coastal cities that had very little industry when reform began in 1978. Shenzhen now has the highest per capita GDP in China. The same holds in Jiangmen, Dongguan, Suzhou--all were industrial backwaters in 1978, and responded to China's opening by creating good environments for private investment and learning from outsiders. Cities that already had industry tended to protect what they had and reform less aggressively.

In China, labor is always on the lookout for a new urban frontier. I contend that the same is true in the United States, particularly now. There is a sense that global cities such as Chicago are stealing all the talent from the hinterland. Little attention is paid to the outmigration pathways from the urban first-tier.

As for the Cool Cities, where do people go when they leave such hot spots such as Austin? We tend to overlook outmigration when the overall population numbers look strong. We also obsess outmigration when the same data are ugly. That's a poor excuse for analysis. Regions can and should do better.