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Upward Mobility from Moving to the Robust Redundant Labor Markets of Open Boomtowns



(p. B3) Chicago in 1850 was a muddy frontier town of barely 30,000 people. Within two decades, it was 10 times that size. Within another two decades, that number had tripled. By 1910, Chicago -- hog butcher for the world, headquarters of Montgomery Ward, the nerve center of the nation's rail network -- had more than two million residents.

"You see these numbers, and they just look fake," said David Schleicher, a law professor at Yale who writes on urban development and land use. Chicago heading into the 20th century was the fastest-growing city America has ever seen. It was a classic metropolitan magnet, attracting anyone in need of a job or a raise.

But while other cities have played this role through history -- enabling people who were geographically mobile to become economically mobile, too -- migration patterns like the one that fed Chicago have broken down in today's America. Interstate mobility nationwide has slowed over the last 30 years. But, more specifically and of greater concern, migration has stalled in the very places with the most opportunity.

As Mr. Schleicher puts it, local economic booms no longer create boomtowns in America.


. . .


Some people aren't moving into wealthy regions because they're stuck in struggling ones. They have houses they can't sell or government benefits they don't want to lose. But the larger problem is that they're blocked from moving to prosperous places by the shortage and cost of housing there. And that's a deliberate decision these wealthy regions have made in opposing more housing construction, a prerequisite to make room for more people.

Compare that with most of American history. The country's economic growth has long "gone hand in hand with enormous reallocation of population," write the economists Kyle Herkenhoff, Lee Ohanian and Edward Prescott in a recent study of what's hobbling similar population flows now.


. . .


Were it not for all the restrictions on housing in the most productive places -- if workers were able to more freely migrate to them -- Mr. Herkenhoff and his co-authors and the economists Enrico Moretti and Chang-Tai Hsieh have estimated that the nation's G.D.P. would be substantially higher. By their calculations, there are millions of workers missing from the Bay Area and metropolitan New York today.


The population growth that is occurring in these metro areas is fueled almost entirely by immigration, as Ryan Avent points out in "The Gated City," where he makes a similar argument to Mr. Schleicher. If we consider only domestic moves, about 900,000 more people have moved away from New York than to it since 2010. On net, about 47,000 have left both San Jose and Washington, D.C., while Boston has lost a net 36,000.



For the full commentary, see:

Emily Badger. "Why New York and the Bay Area Are Missing Millions of Workers." The New York Times (Friday, Dec. 8, 2017): B3.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Dec. 6, 2017, and has the title "What Happened to the American Boomtown?")


The Herkenhoff et al. paper mentioned above, is:

Herkenhoff, Kyle F., Lee E. Ohanian, and Edward C. Prescott. "Tarnishing the Golden and Empire States: Land-Use Restrictions and the U.S. Economic Slowdown." Journal of Monetary Economics 93 (Jan. 2018): 89-109.


The Moretti and Hsieh paper mentioned above, is:

Hsieh, Chang-Tai, and Enrico Moretti. "Housing Constraints and Spatial Misallocation." Working paper, May 18, 2017.


The book by Ryan Avent, mentioned above, is:

Avent, Ryan. The Gated City. Amazon Digital Services LLC, 2011.






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