Who Drives Neighborhood Income Growth? An Analysis of New Versus Long-Term Residents in the Northern California Megaregion

Abstract

Increases in neighborhood income are often attributed to the in-migration of higher income people. We use individual tax records from 1994 to 2015 to show a more nuanced finding. New residents generally have lower incomes than existing residents when they first move into a zip code. However, in-movers have steeper income growth and catch up with original residents within ten years. This pattern is mediated by turnover and generally short tenures for younger people, highlighting the importance of selective migration in combination with incumbents’ income growth in differentiating high- and low-growth zip codes.