Why Has Regional Income Convergence in the U.S. Declined?
Peter Ganong and
Daniel W. Shoag
No 23609, NBER Working Papers from National Bureau of Economic Research, Inc
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.
JEL-codes: E24 J23 J24 R14 R23 R52 (search for similar items in EconPapers)
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Published as Peter Ganong & Daniel Shoag, 2017. "Why Has Regional Income Convergence in the U.S. Declined?," Journal of Urban Economics, .
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