Stranded! How Rising Inequality Suppressed US Migration and Hurt Those Left Behind

IMF Working Papers, June 3, 2019

Source details

Canonical URL: Stranded! How Rising Inequality Suppressed US Migration and Hurt Those Left Behind

Using bilateral data on migration across US metro areas, the paper finds strong evidence that increasing house price and income inequality has reduced long distance migration, the type most linked to jobs.
For uphill migration (from a less to a more prosperous location), lower mobility is driven by increasing house price inequlity, as the disincentives from higher house prices dominate the incentives from higher earnings.
For downhill migration, increasing income inequality drives the fall in migration because the disincentives from lower earnings dominate the incentives from lower house prices.
The model underlines the plight of those trapped in decaying metro areas—those “left behind”.

Rising house price inequality can block labor reallocation toward higher-wage metro areas by creating affordability barriers for potential movers.
Rising income inequality can deter movement out of declining areas by reducing expected earnings gains from relocating to lower-cost areas.
Addressing both housing affordability and income dispersion is central to restoring long-distance job-linked migration and mitigating the welfare losses of those “left behind”.

Subjects: Housing prices, Income inequality, Migration, National accounts, Personal income, Population and demographics, Prices
Keywords: B. migration result, destination increase migration, Economic, Global, house price, house price differential, Housing prices, income differential, income divergence, Income inequality, Inequality, life-cycle migration pattern, long-distance migration, Migration, migration data, migration flow, Opportunity, Personal income, WP