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.

More Research From These Scholars

BFI Working Paper Jul 21, 2020

Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data

Natalie Cox, Peter Ganong, Pascal Noel, Joseph S. Vavra, Arlene Wong, Diana Farrell, Fiona Greig
Topics:  COVID-19
BFI Working Paper May 22, 2019

The Decline, Rebound, and Further Rise in SNAP Enrollment: Disentangling Business Cycle Fluctuations and Policy Changes

Peter Ganong, Jeffrey B. Liebman
Topics:  Employment & Wages
BFI Working Paper Aug 23, 2018

Liquidity vs. Wealth in Household Debt Obligations: Evidence from Housing Policy in the Great Recession

Peter Ganong, Pascal Noel
Topics:  Fiscal Studies, Financial Markets, Employment & Wages, Economic Mobility & Poverty, Monetary Policy, COVID-19