Opportunity and Housing Access

By Acolin, Arthur; Wachter, Susan | Cityscape, January 1, 2017 | Go to article overview

Opportunity and Housing Access


Acolin, Arthur, Wachter, Susan, Cityscape


Introduction

For more than 100 years, in the United States, population has flowed from low-income to high-income states. This movement of people drawn to regions with better employment opportunities has led to a long-term convergence of regional per capita incomes. Evidence suggests, however, that this period of convergence has stopped in recent decades. Divergent opportunity across regions has replaced convergence.1 At the same time, regions with employment opportunities are also experiencing rapid house price and rent appreciation. Unlike in the past, when convergence was accompanied by an increase in the supply of housing in growing regions, house price increases now appear to be limiting the movement of workers to these areas of opportunity (Moretti, 2013) as overall mobility declined from an average of 19.7 percent between 1948 and 1980 to 11.6 percent in 2015 (U.S. Census Bureau, 2016).

New high-productivity jobs are concentrated in higher-housing-cost metropolitan areas with endogenous amenity growth that attracts higher-skilled workers, whereas lower-skilled workers are increasingly concentrated in lower-opportunity regions. This new trend of divergence across metropolitan areas has important implications for economic mobility and social inclusion for the United States going forward.

Similarly, divergence within metropolitan areas is also growing as a result of central city revitalization, which has taken place during the past two decades after widespread urban decline between the 1960s and 1980s. Cities with growing knowledge-based industries have experienced particularly strong residential demand growth, especially in central locations within these cities. Concurrently, central neighborhoods have experienced rapid relative population income growth and rapid gains in college-educated populations (Baum-Snow and Hartley, 2015).

The phenomenon of urban renewal is driven in part by younger, educated individuals' preferences for amenities that are associated with centrality (Couture and Handbury 2015; Edlund, Machado, and Sviatschi, 2015). Revitalization and improved amenities attract young knowledge workers that then attract jobs. Thus, although economic growth in the central areas of cities has been accompanied by an improvement in amenities, the accompanying increase in housing cost has led to concerns about displacement of current residents. At the same time, outlying neighborhoods and inner-ring suburbs with less access to jobs and amenities, experience increases in poverty (Jargowsky, 2016; Kneebone, 2016).

Access to housing is not only about having a roof over one's head; it also affects one's access to opportunity, including education and networking, and to good jobs. Both diverging regional fortunes and urban revitalization are the result of the new importance of skill-based jobs and urban agglomerations that provide a base for the expanding knowledge-based economy. These trends raise the questions of whether lower-skilled, lower-wage households might lastingly be left out of access to opportunity as a result of increasing housing costs at the metropolitan level, as well as at the neighborhood level. At the beginning of the 21st century, the U.S. economy offers opportunities, but they are increasingly concentrated in cities and neighborhoods within cities that are not accessible to all. The dynamics we identify contribute to the rise in overall inequality that has been well identified in the literature (Keeley, 2015; Piketty 2014).

The Divergence in Opportunity and Housing Costs section of this article reviews evidence on the growing spatial divergence of lower- and higher-skilled workers and employment growth and its relationship to housing affordability. The section Equality of Opportunity Across Regions discusses the consequences of these trends for social welfare by demonstrating that areas with high levels of intergenerational mobility have higher housing costs. The section What Can Be Done To Provide Access to High-Productivity, High-Growth Cities and Neighborhoods to All provides a policy framework to respond to these barriers to participation in an increasingly knowledge-based economy. …

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