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http://ssrn.com/abstract=2081216
 
 

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


Peter Ganong


Harvard University

Daniel Shoag


Harvard University - Harvard Kennedy School (HKS)

March 28, 2013

HKS Working Paper No. RWP12-028

Abstract:     
The past thirty years have seen a dramatic decrease in the rate of income convergence across states and in population flows to wealthy places. These changes coincide with (1) an increase in housing prices in productive areas, (2) a divergence in the skill-specific real returns to living in productive places, (3) a redirection of low-skilled migration and (4) diminished human capital convergence due to migration. We develop a model where falling housing supply elasticity and endogenous labor mobility generates these patterns. Using a new panel measure of housing supply regulations, we demonstrate the importance of this channel. Income convergence continues in less-regulated places, while it has stopped in more-regulated places.

Number of Pages in PDF File: 78

Keywords: Convergence, Regulation, Land Use, Migration, Housing Prices

JEL Classification: E24, J23, J24, R14, R23, R52

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Date posted: June 11, 2012 ; Last revised: March 28, 2013

Suggested Citation

Ganong, Peter and Shoag, Daniel, Why Has Regional Income Convergence in the U.S. Declined? (March 28, 2013). HKS Working Paper No. RWP12-028. Available at SSRN: http://ssrn.com/abstract=2081216 or http://dx.doi.org/10.2139/ssrn.2081216

Contact Information

Peter Ganong (Contact Author)
Harvard University ( email )
1875 Cambridge Street
Cambridge, MA 02138
United States
Daniel Shoag
Harvard University - Harvard Kennedy School (HKS) ( email )
79 John F. Kennedy Street
Cambridge, MA 02138
United States
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