Arnold Kling  

Avent and Yglesias Reinforced

Arnold's Hypotheticals... Capital One's Actuals...

By Peter Ganong and Daniel Shoag. They write,

population is no longer flowing to richer 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.

Comments and Sharing

CATEGORIES: Income Distribution

COMMENTS (3 to date)
Becky Hargrove writes:

Zoning is only part of the problem, in that our more vibrant cities are truly a scarce commodity. However people on the left and right are the same in their ideas of limits: not only are certain cities basically 'full' but the idea of job opportunity itself is also 'full' under current definitions in the marketplace. Many more cities and job opportunities will bloom when knowledge does not always have to be indirectly compensated by production wealth. Such indirect and limited use of knowledge actually makes it scarce in the aggregate. The result? Our present unexpected scarcity of geographic knowledge use, hence mostly a handful of 'most' desirable cities in our country.

Steve Sailer writes:

Zoning laws regarding new construction are ferociously enforced where rich white liberals live (witness the struggles of George Lucas in Marin Country and The Edge in Malibu to build on their own land) but zoning laws regarding existing construction are not enforced where poor illegal immigrants live. It's illegal to have six men sleeping in bunks in your garage in South Central L.A., but rich white liberals in Malibu want cheap gardeners, so the laws aren't enforced.

If you are a working class American who wants to earn and live like an America, you are out of luck.

IVV writes:

If people want to self-segregate by social class, then I wouldn't expect a willingness to pay increasing college tuition bills to be an effect. Wouldn't it be more likely that everyone wants to segregate into the highest class possible, but that there are barriers to entry?

I, for one, haven't heard of a rich man being unwelcome in a poor neighborhood, outside of fables.

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