Edward L. GlaeserEdward L. Glaeser is the Fred and Eleanor Glimp Professor of Economics in Harvard’s Faculty of Arts and Sciences and is Director of the Kennedy School of Government’s Taubman Center for State and Local Government.Kristina TobioKristina Tobio is a Senior Research Assistant at the Taubman Center for State and Local Government. A. Alfred Taubman Center for State and Local GovernmentThe Taubman Center and its affi liated institutes and programs are the Kennedy School of Government’s focal point for activities that address urban policy, state and local governance and intergovernmental relations. Taubman Center Policy Briefs are short overviews of new and notable research on these issues by scholars affi liated with the Center. © 2007 by the President and Fellows of Harvard College. The contents refl ect the views of the authors (who are responsible for the facts and accuracy of the material herein) and do not represent the offi cial views or policies of the Taubman Center for State and Local Government.A. Alfred Taubman Center for State and Local GovernmentJohn F. Kennedy School of Government, 79 JFK St., Cambridge, MA 02138Telephone: (617) 495-2199 Email: [email protected]/taubmancenterTAUBMAN CENTERPOLICY BRIEFSPB-2007-5 || May 2007The Rise of the SunbeltBy Edward L. Glaeser, Harvard University, and Kristina Tobio, Kennedy School of GovernmentIntroductionIn the 1930s, the eleven Southern states of the old Confederacy seemed trapped in the cycle of poverty and decline that had characterized the region since the Civil War. Since World War II, however, the region has become one of the great success stories in America. As shown in Figure 1, the South’s share of the national population has increased from 24 percent to 30 percent since 1950. From 1950 to 2000, average income in the South increased from 76 percent of the national average to 94 percent of the national average, while housing prices rose from 83 percent to 91 percent of the national average. The tremendous growth of the South refl ects a nationwide correlation between warmth and growth throughout the postwar period. Figure 2 shows the correlation between January temperatures and population growth from 1950 to 2000. Correlations between January temperatures and income growth, as well as January temperatures and housing price growth, show a similar pattern. While it is clear that the Sunbelt - places with warm Januarys and Julys, including but not limited to the South - has experienced a boom since 1950, it is far from obvious what has been the driving force behind this growth. The traditional explanations for the growth are increasing productivity in the South and increasing demand for Sunbelt amenities, especially its pleasant weather. A third, less studied explanation is the Sunbelt’s more fl exible housing supply. Our empirical analysis assesses the relative contributions of rising productivity, rising demand for Sunbelt amenities, and an increasing Sunbelt housing supply to Southern and Sunbelt growth. Our results suggest that rising demand for Sunbelt amenities has had little to do with the growth of the Sunbelt, while rising productivity and, surprisingly, increased housing supply have both played important roles in the growth of the South and the Sunbelt. Background: Theories of Southern and Sunbelt GrowthIncreasing Productivity: The fi rst hypothesis suggests that Southern growth is due to increases in Southern productivity. Economists have suggested several possible explanations for the increasing productivity experienced in the South during the postwar period. One theory is that increased capital accumulation, such as the construction of factories or purchase of machinery, allowed for the South’s rapid convergenceTAUBMAN CENTER POLICY BRIEFS2with more developed regions in the North. Another possible explanation is the South’s structural transformation from agriculture to manufacturing. Additionally, decreasing transportation costs may have contributed by making the Northern advantages of superior waterways and railroads irrelevant. Finally, changing political institutions, particularly the decline in Jim Crow politics, may also have helped increase productivity as politicians began to concentrate on attracting industry rather than maintaining racist policies.Increasing Demand for Amenities: The second hypothesis suggests that Southern and Sunbelt growth is due to an increasing demand for the amenities, such as mild winters, that these places provide. Southern cities were relatively unpleasant places to live in the early 1900s. Summer heat was oppressive and contributed signifi cantly to the spread of infectious disease. The problem was exacerbated by the South lagging behind the North in its access to clean water. However, by 1950, there were a number of changes that could have signifi cantly increased the amenities of warm regions. Most signifi cantly, improvements in public health and water purifi cation mitigated disease, and the development of air conditioning made the heat much more tolerable. Thus, some economists argue that improvements in Southern consumer amenities made the South a more attractive place to live, thus driving the South’s population growth. Similarly, other warm places outside the South provide sun-related amenities. Using amenities to explain growth in some areas of the Sunbelt, such as California with its pleasant winters, seems intuitive. Los Angeles became a great city because of its weather. Its great industries, such as movies and aerospace, were led by early migrants, like D.W. Griffi th and The Rise of the SunbeltFigure 1: Population, Income, and Housing Values in the South Versus the Entire United States, 1950-2000Notes: Population data from the Census at http:.//www.census.gov/population/censusdata/urbanpop0090.txt and factfi nder.census.gov. Housing value and income ratios from historical U.S. Census County Data Books, found in Haines, Michael R..; Inter-university Consortium for Political and Social Research, 2005-02-25, “Historical, Demographic, Economic, and Social Data: The United States, 1790-2000,” hdl:1902.2/02896 http://id.thedata.org/hdl%3A1902.2%2F02896 Inter-university Consortium for Political and Social Research [distributor9DDI)].TAUBMAN CENTER POLICY BRIEFS3Donald Douglas, who moved there because they liked its Mediterranean climate. But the growth of the Sunbelt today is no longer