This study examines the effect of university host community size on state growth. It is argued that if some positive spillovers from universities are localized, needing a host community for capture, or if universities share agglomeration economies with their host communities, and if these effects are large, one may find a significant effect on state growth. Using pooled data from eight U.S. censuses—primarily state-level and university county-level variables—a significant positive effect of university community size is found on state aggregate personal income growth. Weaker effects are found on state employment growth (positive) and state population growth (negative). This suggests that states and perhaps less developed countries could leverage more economic benefits from siting university programs in larger urban areas. A sensitivity analysis reveals no upper bound to the effect on income but a deceleration of the effects on employment growth and population growth when cities become very large.
