Why has regional income convergence in the U.S. declined?

The past thirty years have seen a dramatic decline in the rate of income convergence across states and in population flows to high-income places. These changes coincide with a disproportionate increase in housing prices in high-income places, a divergence in the skill-specific returns to moving to h...

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Bibliographic Details
Published in:Journal of urban economics 2017-11, Vol.102, p.76-90
Main Authors: Ganong, Peter, Shoag, Daniel
Format: Article
Language:English
Subjects:
Convergence
Housing prices
Land use
Migration
Regulation
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Summary:The past thirty years have seen a dramatic decline in the rate of income convergence across states and in population flows to high-income places. These changes coincide with a disproportionate increase in housing prices in high-income places, a divergence in the skill-specific returns to moving to high-income places, and a redirection of low-skill migration away from high-income places. We develop a model in which rising housing prices in high-income areas deter low-skill migration and slow income convergence. Using a new panel measure of housing supply regulations, we demonstrate the importance of this channel in the data.
ISSN:0094-1190
1095-9068
DOI:10.1016/j.jue.2017.07.002