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In a working paper titled "Music in the Air: Estimating the Social Return to Cultural Amenities," Ifo found that institutions such as opera houses "attract more highly qualified workers, and their higher income spills over to the entire regional economy."
The land of Richard Wagner boasts scores of opera houses and accounts for around 30 percent of all opera performances worldwide, according to the online database Operabase.
The Deutscher Buehnenverein theatre association lists 83 publicly funded opera houses in Germany, many dating back to the country's old patchwork of duchies and principalities.
By contrast, France and Britain have only around a dozen state-funded opera houses each.
But as the financial crisis increases pressure on governments to cut spending, many politicians view the arts, and "highbrow" culture such as opera in particular, as an easy target.
Ifo's study challenged this view.
"The study's findings represent a key argument in favour of subsidising cultural facilities," said one of its authors, Oliver Falck.
"Our results suggest that 'music in the air' does indeed pay off for a location," the study said.
"We find that high-skilled workers who are attracted to locations with a rich and diverse cultural scene generate productive knowledge spillovers," the study said.
In fact, the study found that all skill groups in a location benefitted from the agglomeration of high-skilled workers, Ifo said.
For example, a one percentage point increase in the share of high-skilled workers correlated with a 1.4 percent increase in low-skilled workers' wages and a 1.6 percent rise in skilled workers' wages.
"It is well accepted that being around smart people makes us smarter and more innovative," the think tank said.
"By clustering geographically, innovators can foster each other's creative spirit, learn from each other and become overall more productive. This implies that once a city attracts some innovative workers and companies, its economy may change in ways that make it even more attractive to other innovators," Ifo said.
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The land of Richard Wagner boasts scores of opera houses and accounts for around 30 percent of all opera performances worldwide, according to the online database Operabase.
The Deutscher Buehnenverein theatre association lists 83 publicly funded opera houses in Germany, many dating back to the country's old patchwork of duchies and principalities.
By contrast, France and Britain have only around a dozen state-funded opera houses each.
But as the financial crisis increases pressure on governments to cut spending, many politicians view the arts, and "highbrow" culture such as opera in particular, as an easy target.
Ifo's study challenged this view.
"The study's findings represent a key argument in favour of subsidising cultural facilities," said one of its authors, Oliver Falck.
"Our results suggest that 'music in the air' does indeed pay off for a location," the study said.
"We find that high-skilled workers who are attracted to locations with a rich and diverse cultural scene generate productive knowledge spillovers," the study said.
In fact, the study found that all skill groups in a location benefitted from the agglomeration of high-skilled workers, Ifo said.
For example, a one percentage point increase in the share of high-skilled workers correlated with a 1.4 percent increase in low-skilled workers' wages and a 1.6 percent rise in skilled workers' wages.
"It is well accepted that being around smart people makes us smarter and more innovative," the think tank said.
"By clustering geographically, innovators can foster each other's creative spirit, learn from each other and become overall more productive. This implies that once a city attracts some innovative workers and companies, its economy may change in ways that make it even more attractive to other innovators," Ifo said.
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