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Spatial Policies

Paper Session

Monday, Jan. 4, 2021 10:00 AM - 12:00 PM (EST)

Hosted By: American Economic Association
  • Chair: Cecile Gaubert, University of California-Berkeley

Growing Apart? Recent Trends in Spatial Income Inequality

Cecile Gaubert
,
University of California-Berkeley
Patrick Kline
,
University of California-Berkeley
Danny Yagan
,
University of California-Berkeley
Damian Vergara
,
University of California-Berkeley

Abstract

We study trends in income inequality across U.S. states and counties over the period 1960-2019, with particular attention to how these trends depend on the notion of income considered and the feature of the income distribution used to rank communities. Our first finding is that both states and counties have been diverging in terms of per-capita incomes since the late 1990s, with counties exhibiting a steady rise in both pre- and post- transfer income inequality since the 1970s. The pace of this increase in regional income dispersion exceeds that of the well-documented growth in aggregate inequality across people. Second, means-tested transfers have become significantly less spatially concentrated over the past 30 years. This reduction is driven in part by a rapid convergence of poverty rates across counties during the 1990s. More generally, cross state dispersion in the bottom quantiles of income has decreased markedly in the past few decades. Third, trends in the dispersion of per-capita area incomes are largely driven by top earners. The dispersion across states and counties of median household incomes has grown very modestly over the past 30 years, while the dispersion of 99.9th percentiles of state incomes has risen sharply. Our findings suggest the potential equity gains achievable from indexing top tax rates to residential location have grown significantly in recent decades.

Local Industrial Policy and Sectoral Hubs

Esteban A. Rossi-Hansberg
,
Princeton University
Pierre-Daniel Sarte
,
Federal Reserve Bank of Richmond
Felipe Schwartzman
,
Federal Reserve Bank of Richmond

Abstract

Spillovers across workers within and across occupations justify the use of local industrial policy. Optimal policy aims to internalize the effect workers have on each other. The importance of this form of externalities, however, varies by industry. Consequently, and depending on the cost of transporting the industry’s output, some industries should be evenly distributed across cities, while others should be concentrated in sectoral hubs. The creation of some of these hubs should be encouraged in small cities. Using a spatial equilibrium model with multiple industries and occupations, we estimate local industry-occupation specific externalities and study the resulting optimal industrial policy. 

Could Gentrification Stop the Poor from Benefiting from Transportation Improvements?

Clare Balboni
,
Massachusetts Institute of Technology
Gharad Bryan
,
London School of Economics
Melanie Morten
,
Stanford University
Bilal Siddiqi
,
University of California-Berkeley

Abstract

Cities provide many public goods, such as transport, which are ``place-based'. In a model of urban mobility, we study how improving public goods affects welfare. Concentrating on the case with two types (``rich and poor''), we show rich distributional patterns.
Discussant(s)
David Autor
,
Massachusetts Institute of Technology
David Rezza Baqaee
,
University of California-Los Angeles
Adrien Bilal
,
Harvard University
JEL Classifications
  • R1 - General Regional Economics
  • R2 - Household Analysis