It employs path analysis and structural equation models to isolate the effects of technology, human capital and/or the creative class, universities, the diversity of service industries and openness to immigrants, minorities and gay and lesbian populations on regional income. [...] Jacobs (1961, 1969) understood and emphasized the role of cities and regions in the transfer and diffusion of knowledge. [...] Mellander and Florida (2006), and Marlets and Van Woerken (2004)’ studies of Sweden and the Netherlands have demonstrated that the occupational measure of human capital significantly outperform educational attainment in accounting for regional development. [...] The second key issue in the current debate involves identifying the factors that shape the geographic distribution of human capital or the creative class. [...] Our research examines the factors that shape this flow and determine the divergent levels of human capital and the creative class - education and skill - across regions.