NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Peter Ganong, Daniel W. Shoag

NBER Working Paper No. 23609
Issued in July 2017
NBER Program(s):Development of the American Economy, Labor Studies, Public Economics

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.

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Document Object Identifier (DOI): 10.3386/w23609

Published: Peter Ganong & Daniel Shoag, 2017. "Why Has Regional Income Convergence in the U.S. Declined?," Journal of Urban Economics, .

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