Tuesday, December 25, 2012

Lack of affordable housing in rich areas contributes to income inequality

From Bloomberg Business Week

Bloomberg BusinessWeek has a great story on the lack of affordable housing in the suburbs contributing US income inequality. However, the studies authors make a more startling argument: that rich neighborhoods are using zoning and land use laws to keep the poor from jobs in high income area.. This "discrimination" has stopped the shrinkage of the rate of income inequality that existed from 1880 to 1980.

The business week article is based on a paper by "Peter Ganong and Daniel Shoag" called "Why has regional income convergence in the US Stopped". Both work a Harvard University.

What's new in the paper is they have developed a data set that models communities land use and zoning laws.  The restrictions increase the price of housing. The authors content that the decrease in regional and state to state mobility has increased income inequality.

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