Why Has Regional Convergence in the U.S. Stopped?

Ganong, Peter; Shoag, Daniel

doi:10.2139/ssrn.2081216

Cited by 29 publications

(27 citation statements)

References 41 publications

(32 reference statements)

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“…The standard economic model would explain housing costs through supply‐and‐demand dynamics. Housing shortages caused by restrictive zoning laws, which render housing markets inflexible (Ganong and Shoag, ), or the foreclosure crisis, which decreased housing supply while increasing demand by pushing ex‐homeowners into the rental market (DiPasquale, ), could drive rent hikes. And indeed, a housing shortage was behind America's last major affordable‐housing crisis, which occurred in the postwar years (Sugrue, [1996] ).…”

Section: Making Sense Of the Momentmentioning

confidence: 99%

Heavy is the House: Rent Burden among the American Urban Poor

Desmond

2018

Int J Urban Regional Res

103

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During the past decade, the incomes of poor Americans have fallen or flat-lined, housing costs have soared and public policy has failed to bridge the gap. As a result, the majority of poor renting families in America now devote at least half of their income to covering housing costs, and eviction has become a common yet consequential event in their lives. While housing is central to the lives of the urban poor, it remains marginal to the sociology of American inequality. This essay begins by charting the growing rent burden among low-income households, and then draws on the unique contributions of Pierre Bourdieu to the study of the home to sketch an agenda for analyzing the roots and implications of the loss of affordable urban housing, a prerequisite for offering policy prescriptions. The collapse of affordable rental housing in AmericaFor almost a century, there has been broad consensus in America that families should spend no more than 30% of their income on housing, allowing enough money for other necessities, such as food and transportation. Until recently, most renting families met this goal. But times have changed, especially for the urban poor. As Figure 1 shows, the number of renting families below the poverty line spending less than 30% of their income on housing costs fell from 1.3 million in 1991 to 1.07 million in 2013, even as the number of renting families in the country grew. Meanwhile, the number of poor renting households spending over half of their income on housing costs rose from 2.04 million in 1991 to 2.85 million in 2013. Today, over half (52%) of all poor renting families in America spend over 50% of their income on housing, and one family in four spends over 70% on rent and utilities. Black and Hispanic families, the majority of whom rent their housing (Pendall et al., 2005), are disproportionately affected by these trends.These figures are truly staggering, both from a historical and an international perspective. Historically, the American Housing Survey (2013) did not even have a category for renting households paying more than 70% of their income on rent. In 1975, for example, the upper bound of this variable was set at '50% or more'. By international standards, the percentage of families in the United States that are severely rent burdened is extraordinarily high. In 2010, only 4% of households in Finland and Portugal, 16.5% of those in the United Kingdom and 22% of those in Denmark spent more than 40% of their disposable income on housing (European Commission, 2013). This does not imply that rising rent burdens are unique to the American poor. The US case may be extreme--in part because severe deprivation here has no real equivalent in the developed world--but housing costs have surged in cities around the globe, from Vancouver to Zurich, Sydney to Mumbai (Gyourko et al., 2013).Eviction has become commonplace in poor urban neighborhoods. In New York City alone, over 350,000 cases are processed through the housing court each year, the vast majority of which allege nonpayme...

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Section: Making Sense Of the Momentmentioning

confidence: 99%

Heavy is the House: Rent Burden among the American Urban Poor

Desmond

2018

Int J Urban Regional Res

103

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“…The key to convergence is the mobility of capital and labor. Ganong and Shoag () show that during the strongest period of income convergence across states in the U.S. (1940–1980), directed migration accounted for approximately one‐third of income convergence.…”

Section: Spatial Patterns Of Income Inequality and Migrationmentioning

confidence: 99%

“…Recent work in economic geography (Kemeny and Storper 2012), regional science (Partridge 2010), and urban economics (Glaeser and Resseger 2010) using either the new economic geography (NEG) framework or an agglomeration framework (mechanisms are different but the outcome is similar) results in the expectation that, at least in the short run, the concentration of population and economic activities in particular cities or regions does cause increasing regional economic inequality mostly through demand side shocks. Another explanation uses housing costs as a supply side shock to explain changes in the composition of migration, thus increasing income divergence (Ganong and Shoag 2012;Withers and Clark 2006). Whatever the ultimate explanation, at least according to Galbraith and Hale (2006), location is a primary determinant of how income inequality is experienced.…”

Section: Introductionmentioning

confidence: 99%

Income Migration and Income Convergence across U.S. States, 1995–2010

Shumway¹,

Otterstrom²

2015

Growth and Change

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In this paper we examine how internal migration redistributes earned income across U.S. states between 1995 and 2010. We examine interregional income flows by first describing the movement of earned income between U.S. states. Second, we examine the effect of income migration on spatial patterns of income inequality. The question we ask is, “does migration increase or decrease convergence income across U.S. States?” A primary contribution of this paper is that instead of using only 1 year of income migration data to explore these issues, we use yearly data from the first year the Internal Revenue Service (IRS) data started including income (1995/1996) up to the most current data available (2009/2010). Results indicate that income convergence/divergence across states varies by whether or not there is general economic expansion or contraction. Nevertheless, some high‐amenity states continually attract high‐income households.

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“…The key to such spatial equilibrium is the mobility of capital and labor. Ganong and Shoag (2012) illustrated that during the strongest period of income convergence across states in the United States , migration accounted for approximately one third of that convergence. When convergence is achieved, individual residential preferences for different locations diminish, at least relative to wages or income.…”

Section: Amenity Migration and Environmental Hazardsmentioning

confidence: 99%