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

Peter Ganong and Daniel Shoag

Journal of Urban Economics, 2017, vol. 102, issue C, 76-90

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.

Keywords: Convergence; Regulation; Land use; Migration; Housing prices (search for similar items in EconPapers)
JEL-codes: E24 J23 J24 R14 R23 R52 (search for similar items in EconPapers)
Date: 2017
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