The building was five storeys, but each apartment would have cost more than half a million dollars—we were renting—if it was on the market, and with dozens of units on the floor, it would have been very profitable to build a sixth storey. They couldn't because of height restrictions in the city. Therefore, they were unable to add units, which raised prices, and eventually it crowded out lower-skilled workers like me, who had to move out.
In my research, I created a measure of land use restrictions and regulations over time and by place, so you can see that it's only when one of these rich regions really starts putting in significant restrictions on development that prices rise and migration stops as less-educated people are pushed out and income catch-up ended. Places that don't put in these restrictions or regulate less have much less of this problem.
I know it's weird to think that local development policies—or at least what's very local in the U.S.—and land use restrictions have big national consequences or that these policies, which are set at very local levels, will affect things like national income catch-up or convergence, or national migration patterns, but that's what the research shows. When the legal environment changed 30 years ago and made these policies much more common, these local policies became a national issue. I think there is, or was, increasing recognition in U.S. policy circles of the national importance of this issue. I know that President Obama's Council of Economic Advisers had written a report specifically about this topic on their way out, and on the research that I'm discussing here today.
I want to end by talking about what things look like in Canada. I don't claim to be an expert on the Canadian data. It is more complicated because the regional dynamics are complicated by fluctuating national resource prices to a much greater extent than in the U.S. Still, if you look at the data, you can see that, while income convergence, catch-up, and migration towards richer places is still occurring, there does seem to have been a slowing in recent years. Recent housing price trends in some particularly higher-wage or productive cities do raise concerns about the continuation of those trends. For a body that's interested in a national perspective on poverty, opportunity, and inequality, I think that development policies that might seem like local matters are actually important when you're thinking about these macro-level issues. The possibility of pricing people out and creating this segregation based on education or income levels is an issue that should be on your radar.