Inequality in Housing Prices and Incomes Reduces Mobility

A working paper from the International Monetary Fund, Stranded! How Rising Inequality Suppressed US Migration and Hurt Those ‘Left Behind’, argues that regional inequality in home prices and household incomes has reduced the prevalence of long-distance moves, which are more likely than short-distance moves to be associated with employment. Inter-state migration rates declined from 3% to 1.5% between 1981 and 2016.

Using data from the Current Population Survey, Zillow Home Value Database, and the Federal Housing Finance Agency’s House Price Index, the paper shows that higher housing prices in more prosperous metropolitan areas deter migration of lower-income households from poorer to richer metropolitan areas. At the same time, the prospect of lower earnings deters migration of higher-income households from richer to poorer metropolitan areas. The authors state that this decline in migration reduces labor market churning, lengthening economic downturns and slowing recovery.

Job opportunities are more related to long-distance moves than local moves. Thirty-four percent of moves across counties were employment-related compared to 20% of moves within counties in 2015. Long-distance migration is also linked to educational attainment; in 2016 those with education beyond high school were almost twice as likely to move to another state as those with only a high school diploma. The education-level link indicates a wage premium for workers with higher education attainment who have become geographically concentrated in more prosperous metropolitan areas.

The authors’ statistical model of inequality in housing prices and household incomes explains two-thirds of the fall in long-distance migration of more than 200 miles between poor metropolitan areas and prosperous ones. The authors urge policymakers at all levels of government to help workers gain new skills, address the supply of housing (and its cost) through modernization of land-use regulations and reduction of bureaucratic delays, and improvements to transportation and public transit to widen the catchment areas of prosperous metropolitan areas.

The full working paper is available at: