Tuesday, December 25, 2012

BusinessWeek: Housing policies of the rich have contributed to unemployment

Bloomberg Business Week

Bloomberg BusinessWeek has a great story on the lack of affordable housing in the suburbs contributing US income inequality. However, 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.

barriers to the poor in high income areas are discriminatinon against the poor by the rich though zoning lawas and regulation is responsibile for a large amount if income inequality.  That is unemployment due to geographic mis-match has contributed to income inequality. Interestingly, city with less restricted housing policies have not been affected by income inequality.

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