Agglomeration economies among Creative Class types have created rising house prices, in a way that Virginia Postrel suggests might be self-reinforcing, in a way that might ultimately prevent the influx of new creative types.
The news isn’t all bad. Less-educated workers may not have the opportunities they once had in places such as California and New York, but they can still raise their real incomes, factoring in housing costs, by migrating to states like Nevada, Florida and Texas. “Places that didn’t have this increase in [land-use] regulation still have the old process that worked,” [Harvard's Daniel] Shoag says, “where people move to the richer areas, human capital levels converge, incomes converge -- the whole chain that used to exist for the whole country is still true if you focus just on the areas that haven’t had as large an increase in regulation.”

As I have argued elsewhere, there are two competing models of successful American cities. One encourages a growing population, fosters a middle-class, family-centered lifestyle, and liberally permits new housing. It used to be the norm nationally, and it still predominates in the South and Southwest. The other favors long-term residents, attracts highly productive, work-driven people, focuses on aesthetic amenities, and makes it difficult to build. It prevails on the West Coast, in the Northeast and in picturesque cities such as Boulder, Colorado and Santa Fe, New Mexico. The first model spurs income convergence, the second spurs economic segregation. Both create cities that people find desirable to live in, but they attract different sorts of residents.

This segregation has social and political consequences, as it shapes perceptions -- and misperceptions -- of one’s fellow citizens and “normal” American life. It also has direct and indirect economic effects. “It’s a definite productivity loss,” Shoag says. “If there weren’t restrictions and you could build everywhere, it would be productive for people to move. You do make more as a waiter in LA than you do in Ohio. Preventing people from having that opportunity to move to these high-income places, making it so expensive to live there, is a loss.” That’s true not only for less-educated workers but for lower earners of all sorts, including the artists and writers who traditionally made places like New York, Los Angeles and Santa Fe cultural centers.
Ms Postrel suggests that residential sorting might be lamented publicly by Creative Class types, yet privately welcomed.
They may wring their hands over inequality, but in everyday life they see segregation as a feature, not a bug. It keeps out fat people with bad taste. Paul Krugman may wax nostalgic about a childhood spent in the suburbs where plumbers and middle managers lived side by side. But I doubt that many of his fervent fans would really want to live there. If so, they might try Texas.
Perhaps not. A few years ago,  I noted a post suggesting the popping housing bubble might be restoring affordable housing in some of those richer areas.  Whether that is sufficient to undo the sorting into polarized neighborhoods remains to be seen.  Whether college hiring will be rendered easier also remains to be seen.

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