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Why Has Regional Income Convergence in the U.S. Declined?

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Listed:
  • Peter Ganong
  • Daniel W. Shoag

Abstract

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.

Suggested Citation

  • Peter Ganong & Daniel W. Shoag, 2017. "Why Has Regional Income Convergence in the U.S. Declined?," NBER Working Papers 23609, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23609
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    References listed on IDEAS

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    Cited by:

    1. repec:iza:izawol:journl:y:2018:n:423 is not listed on IDEAS
    2. Brainard, Lael, 2017. "Why Persistent Employment Disparities Matter for the Economy's Health : a speech at "Disparities in the Labor Market: What Are We Missing?" a research conference sponsored by the Board of Go," Speech 970, Board of Governors of the Federal Reserve System (U.S.).
    3. Laurent Simula & Alain Trannoy, 2018. "Is high-skilled migration harmful to tax systems’ progressivity," IZA World of Labor, Institute for the Study of Labor (IZA), pages 423-423, February.
    4. Katharine G. Abraham & Melissa S. Kearney, 2018. "Explaining the Decline in the U.S. Employment-to-Population Ratio: A Review of the Evidence," NBER Working Papers 24333, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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