Moving to density: Half a century of housing costs and wage premia from Queens to King Salmon

Abstract

Have workers stopped moving to the highest-density, highest-productivity places in the country because of a decline in the urban wage premium, or because the rent is too high? We analyze how important these two explanations are by studying them in one and the same empirical analysis. We find that non-college workers now effectively face a housing-inclusive urban wage penalty, while workers with college education continue to face a significant urban wage premium. We relate these findings to the share of native-born cross-state migrants across different parts of the country, and find that native-born cross-state migrants, especially non-college workers, have become less likely to live in the highest-productivity areas.