Mind the gap: Professor Tom Kemeny’s new research examines regional income disparity in the U.S.

In his latest piece of research, Munk School Associate Professor Tom Kemeny and Michael Storper of the London School of Economics (LSE) use new techniques to highlight a deep and growing polarization in the American spatial system — which differs from income gaps of the past and contrasts with the standard narrative of 'superstar’ and ‘left-behind’ places.

In a 2022 Munk School interview, Kemeny said that ignoring the influence of space on inequality would be an oversight, especially in a country whose residents are increasingly placebound. To redress this, Kemeny and Storper identify six distinct developmental pathways that American regions have followed over time. They show that a populous and economically important group of superstar cities are not just winners today but have consistently sat atop the income hierarchy since 1940. Meanwhile, the country’s other regions are variously, ‘catching up,’ ‘falling behind’ or ‘surging ahead’ from very different starting points in 1940, but mostly converging today to a relatively common and distinctly lower level of prosperity.  

Since around 1980, income gaps separating higher- and lower-performing regions in the U.S, have sharply grown. The phenomenon is intertwined with some of the most pressing social, economic and political challenges of our time — illustrating how economic opportunity has become increasingly place-based. The issue has grown into a key concern for policymakers.  

To examine what’s driving this pattern, Kemeny and Storper use Group-Based Trajectory Modeling (GBTM), a form of unsupervised machine learning, to identify commonalities among individual cities’ patterns of change. For Kemeny, the approach was “an incredibly illuminating way to look at what would otherwise be a very messy picture.”

Kemeny and Storper’s findings show that, since 1980, the rise in inequality across the American urban-regional system has been marked simultaneously by income convergence and divergence – the former describing the majority of regions’ movement towards a common level of prosperity, and the latter capturing the pulling away of the highest-performing cities.

The research challenges the long-held belief that income gaps between regions would gradually decline over time. Previously, the presumption was that individuals would seek better economic prospects in higher-income regions, leading to a natural convergence of income levels across the country. And yet, the data reveals a far more complex picture.

Kemeny explains that there’s a growing body of evidence showing a significant effect of place on job opportunities and a community's ability to provide public goods like high quality education or healthcare in such places where the average income is lower. The importance of this notion lies in the fact that disparities impact general economic well-being and exacerbate deep-seated societal issues that could affect the fates of entire communities.

What to do, however, remains widely debated. As in many countries, the U.S. government, under the Biden administration, has started to address regional income disparities more proactively. Through the 2022 CHIPS and Science Act, for instance, the federal government aims to spur several non-superstar regional centers through technology-oriented investments. In seeking to address the challenges of spatial inequality, Kemeny and Storper’s research shows us that long-term pathways of development count, not just year-to-year ups and downs. The long-term DNA of regions must inform the scale and design of policies to help them.

“The goal should be equality of opportunity,” emphasizes Kemeny. “While perfect equality may remain elusive, we can ensure that every community has a fair chance to thrive."  

Read Kemeny and Storper's full research paper