Avent and Yglesias Reinforced
By Arnold Kling
By Peter Ganong and Daniel Shoag. They write,
population is no longer flowing to richer states…in recent years (1) the real returns to migration to productive places have fallen dramatically for low-skilled workers but have remained high for high-skilled workers, (2) high-skilled workers continue to move to areas with high nominal income, and (3) low-skilled workers are now moving to areas with low nominal income but high real income net of housing costs. As a result, there are lower net population flows to productive places and a divergence in skill levels that slows income convergence.
Pointer from Virginia Postrel, who writes,
there are two competing models of successful American cities. One encourages a growing population, fosters a middle-class, family-centered lifestyle, and liberally permits new housing. It used to be the norm nationally, and it still predominates in the South and Southwest. The other favors long-term residents, attracts highly productive, work-driven people, focuses on aesthetic amenities, and makes it difficult to build. It prevails on the West Coast, in the Northeast and in picturesque cities such as Boulder, Colorado and Santa Fe, New Mexico. The first model spurs income convergence, the second spurs economic segregation. Both create cities that people find desirable to live in, but they attract different sorts of residents.
I think that there is a strong desire on the part of people to self-segregate by social class. As you know, that is my explanation for the willingness of parents to pay high tuition bills.
Suppose, as this paper seems to suggest, that the growth in inequality of wages is to a large extent the result of zoning regulations. The irony, which Postrel notes, is that the political constituencies that are most likely to blame Ronald Reagan for increased inequality may be the ones most responsible for exacerbating it.