Metropolitan areas with more educated people have higher levels of income, but they also have higher housing costs, says CityLab's Richard Florida. A new paper from urban economist Richard Green, of the University of Southern California, and Jung Choi, of the Urban Institute takes, a deep dive into the divide between the more and less educated and how it leads to unaffordable housing markets.
He writes: First, the good news: Having more college graduates in a metro means higher wages for everyone. A 1 percent increase in the share of college graduates brings a 1.4 percent increase in wages across the board, even after controlling for sorting—that is, an individual’s choice to move to an area with lower rents or higher paying jobs, or because of other factors.
But these wages gains accrue disproportionately to college grads. A 1 percent increase in the share of college graduates leads to a 1.7 percent increase in hourly earnings for the same group. Meanwhile, those with a high school degree or less see an increase of less than 0.7 percent.
Now the bad news: The increase in wages associated with college grads tends to translate into higher housing costs. Although college grads tend to earn more than enough to cover these costs, less advantaged, less educated groups end up spending a far greater share of their income on housing.Read More