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Economy

How College Grads Drive Up Urban Rents

In cities that gain college graduates, wages rise but so do rents, resulting in a cost burden for the least advantaged.
Students graduating from Grove City College in Pennsylvania
Students graduating from Grove City College in PennsylvaniaKeith Srakocic/AP

It’s abundantly clear that in today’s economy, the ability to attract and mobilize highly educated people—so-called human capital—is the key factor in the the wealth of nations as well of that of cities. But the driving force of talent in economic growth also contributes to our worsening divides. While metropolitan areas with more educated people have higher levels of income, they also have higher housing costs. And the burden of those costs falls hardest on the less educated.

A working paper by urban economist Richard Green, of the University of Southern California, and Jung Choi, of the Urban Institute takes, a deep dive into this conundrum, using detailed data from the U.S. Census, the American Community Survey, and the longitudinal Panel Study of Income Dynamics to track the impact of college graduates on wages and rents across U.S. metros. The data spans the more-than-three-decade period from 1980 to 2013.