Which metropolitan economies are the most productive? Our broadest measure of economic output is gross domestic product — the total value of goods and services produced by our economy. Economists usually compare the productivity of national economies by looking at GDP per worker or per employee. At the sub-national level, the Bureau of Economic Analysis estimates an analogous concept “Gross Metropolitan Product” –the total value of goods and services produced in a metropolitan area.
If we divide metropolitan GDP by population, we get a rough idea of which metropolitan economies are the most productive on a per person basis. Nationally, gross metropolitan product averages about $55,000 per person in the nation’s largest metropolitan areas.
The distribution is characterized by two distinct outliers: Riverside, CA on the low end, and San Jose on the high end. The two cities are 400 miles apart, but San Jose has a GDP per capita almost $75,000 more than Riverside (that’s more than most cities produce in a year per person).
In general, it’s clear that the productivity of a few big cities in the northeast and west coast is much higher than those in the middle of the country. Nine metros have gross domestic product over $65,000 per capita, and the only one of these not on the east or west coast is Houston.
It should be noted that this looks quite similar to the map of educational attainment: GDP per capita and educational attainment are highly correlated, and an increase in the level of talent in one’s city is associated with an increase in GDP:
We should keep in mind that gross product is a broad measure of economic activity: it picks up the value of goods and services produced in an area, including the rental value of owner-occupied homes and returns to physical capital. While most labor income in a metropolitan area goes to residents of that area, capital income often goes to owners who live elsewhere. Since GMP measures the value of services where businesses are located, rather than where shareholders live, it apportions the capital returns for banks in New York, to New York, and for software firms in Seattle, to Seattle, rather than to the location of the shareholders of these firms.
Some technical notes: The Bureau of Economic Analysis measures gross domestic product of metropolitan areas in chained 2009 dollars. These data are for calendar year 2013; annual data for 2014 should be released in the third quarter of this year. You can explore GDP by industry sector to see which industries make the biggest contribution to regional output in each metropolitan area. Detailed data are available on the BEA website: http://www.bea.gov/regional/index.htm