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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

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.

JEL-codes: E24 J23 J24 R14 R23 R52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-lma, nep-mac and nep-ure
Date: 2017-07
Note: DAE LS PE
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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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