Creativity as Engine for Regional Growth: Identification and Interpretation in the Netherlands

The relationship between creative class and employment growth has been established in numerous studies. In the context of the Netherlands, the impact of the creative class to employment growth is demonstrated as significant and positive. However, the issue of identification robustness daunts the extent of the relationship. The creative class may drive the urban growth, but it is also possible that endogenous effects between the two variables generate unobserved bias, which undermines the robustness of the relationship. This study aims to make a contribution particularly on the issue of identification robustness between the creative class and urban growth in the context of the Netherlands. In addition, this study has several comparative features in order to gain deeper insight into the causal relationship between creative class and employment growth. Three most important features are namely the comparison with the causal identification for creative industries - being the other aspect of the creative economy, the comparison of three different definitions of the creative class and the typical comparison with human capital. Other than analysing the identification robustness, this study also examines the spatial distribution and the explanatory factors for the creative class and creative industries. These analyses utilize panel data of the 40 COROP regions of the Netherlands over the course of 19 years (1996-2015). It is concluded that indeed creative class drives employment growth, even with the controlled endogenous effects through instrumental variables. However, regard for the possible consequence of creative class in increasing inequality must be undertaken, as striking balance between the creative class and working class should be the aim rather than to choose one over the other. Improving education, stimulating related variety and providing accessible amenities might aid cities to achieve the positive growth potentials from the creative class.