Do Anchor Institutions Support Regional Economic Resiliency? Evidence from Penn State University – Federal Reserve Bank of Philadelphia

Report on the Role of Anchor Institutions in Advancing Sustainable Development Goals

Introduction: Anchor Institutions and Sustainable Regional Economies

Anchor institutions, such as hospitals and universities, are fundamental to achieving sustainable regional development. By providing stable employment and fostering local economic activity, they directly contribute to Sustainable Development Goal 8 (Decent Work and Economic Growth). Furthermore, their role in supplying skilled workers and promoting innovation aligns with SDG 4 (Quality Education) and SDG 9 (Industry, Innovation, and Infrastructure), creating a foundation for resilient and sustainable communities as envisioned in SDG 11 (Sustainable Cities and Communities).

Case Study Analysis: Economic Resilience in State College, PA

A study was conducted to assess the impact of large research universities on regional economic resilience during downturns, focusing on the State College, PA metro area, home to Pennsylvania State University (Penn State). The analysis compared the region’s labor market performance against the rest of Pennsylvania during the last three recessions to understand how such institutions support local progress toward the Sustainable Development Goals.

Key Findings on Economic Resilience and SDG Alignment

The research yielded critical insights into the stabilizing effect of anchor institutions on local economies, highlighting their contributions to and challenges for the SDGs.

1. Enhanced Economic Stability and Decent Work (SDG 8): The presence of Penn State had a significant stabilizing effect on the local economy. During recessions, the unemployment rate in State College increased less than in the rest of Pennsylvania, demonstrating the institution’s capacity to safeguard employment.
2. Accelerated Growth in Key SDG Sectors (SDG 3, SDG 4, SDG 8): The region experienced faster employment growth during recovery periods. This growth was notably concentrated in the education and health services sectors, which are critical for achieving SDG 4 (Quality Education) and SDG 3 (Good Health and Well-being), while simultaneously driving economic recovery.
3. Vulnerabilities in Building Sustainable Communities (SDG 11): The study revealed that a high degree of reliance on anchor institutions can create economic vulnerabilities. The disruption to campus activities during the COVID-19 pandemic illustrated the risks associated with this dependency, posing a challenge to the long-term resilience required for sustainable communities.

Policy Implications for Sustainable Development

The findings confirm that anchor institutions are vital partners in localizing the Sustainable Development Goals but are not immune to systemic shocks. Policymakers can utilize this research to develop strategies that leverage the strengths of these institutions while mitigating associated risks.

• Policymakers should recognize anchor institutions as key drivers for sustaining employment and promoting decent work, in line with SDG 8.
• Strategic planning is necessary to address the vulnerabilities associated with economic reliance on these institutions, thereby enhancing community resilience as targeted by SDG 11.
• Fostering multi-stakeholder partnerships, as encouraged by SDG 17 (Partnerships for the Goals), between local governments and anchor institutions can help align regional economic strategies with the broader 2030 Agenda for Sustainable Development.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article directly addresses this goal by focusing on the role of anchor institutions in driving “job growth,” stabilizing local economies, and influencing unemployment rates. It examines how these institutions contribute to “long-term regional growth” and provide employment, which are central themes of SDG 8.

• SDG 4: Quality Education

  This goal is relevant as the article identifies “large research universities” like Penn State as key anchor institutions. It highlights their role in providing “skilled workers” and “fostering innovation,” which are essential outcomes of quality tertiary education.

• SDG 3: Good Health and Well-being

  The article explicitly mentions “hospitals” as anchor institutions and notes that “strong hiring in… health services sectors” drives employment growth. This connects the stability of the health sector workforce to regional economic health, which is an aspect of SDG 3.

• SDG 11: Sustainable Cities and Communities

  The research focuses on the “metro area of State College, PA” and how anchor institutions support “regional economic resiliency.” By analyzing how a region’s economy performs during economic downturns and the stabilizing effect of its core institutions, the article directly relates to creating resilient and sustainable communities.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 8.5: Achieve full and productive employment and decent work for all.

   The article’s core analysis revolves around labor market performance, specifically “unemployment rate” and “employment growth.” The finding that State College’s unemployment rate “rose less than the rest of Pennsylvania” during recessions directly relates to maintaining employment levels.

2. Target 4.4: Substantially increase the number of youth and adults who have relevant skills for employment.

   The article states that anchor institutions are crucial for “providing skilled workers.” This implies that universities like Penn State are fulfilling their role in equipping the workforce with necessary skills, which is the objective of this target.

3. Target 3.c: Substantially increase health financing and the recruitment, development, training and retention of the health workforce.

   The finding of “faster employment growth… especially in education and health services sectors” points directly to the recruitment and hiring of the health workforce, a key component of this target.

4. Target 11.a: Support positive economic, social and environmental links between urban, peri-urban and rural areas by strengthening national and regional development planning.

   The study of how “regions rely on their anchor institutions” and how these institutions “stabilize local economies” provides data that can be used by policymakers to strengthen regional development planning, which is the essence of this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Unemployment Rate

  This is a primary indicator used in the study. The article explicitly states, “State College’s unemployment rate increased less during recessions compared with the rest of Pennsylvania.” This directly measures progress toward Target 8.5.

• Employment Growth Rate

  The article mentions “faster employment growth in State College during recovery periods” as a key finding. This indicator measures the creation of jobs and economic recovery, relevant to Target 8.5.

• Sector-Specific Hiring

  The article specifies that growth was “driven by strong hiring in education and health services sectors.” This serves as a more granular indicator for measuring progress in workforce development under Target 4.4 and Target 3.c.

• Economic Resilience

  The entire study is an attempt to measure the “stabilizing effect” of anchor institutions on a regional economy during downturns. The comparative analysis of economic performance during recessions serves as an indicator of a region’s resilience, which is relevant to Target 11.a.

4. SDGs, Targets, and Indicators Table

Source: philadelphiafed.org