Study: Jersey undergoing 'brain gain' despite drop in population

New Jersey has lost population in recent decades because low-income residents are fleeing to states with a reduced cost of living, while those moving into the Garden State are generally better educated and earn higher salaries, according to a Princeton University study released today.

The study on migration, conducted by the Policy Research Institute for the Region at the university's Woodrow Wilson School, shows "a brain gain" in the state despite an overall net loss of residents.The study found that there is a modest population gain in New Jersey residents with a college degree, particularly those with PhDs, while the majority of people leaving the state are at the lower end of the income and education spectrum. In general, the study found New Jersey's state income tax policy does not cause people to leave.

Additionally, the results show a 70 percent increase in the numbers of "half-millionaires" in the state between 2002 and 2006, jumping from about 26,000 to 44,000 during that time span.

"Further, migration out of the state is almost entirely due to low-income individuals moving to areas with lower living costs," said Richard Keevey, director of the Policy Research Institute for the Region, in a statement accompanying the survey results. "The most important step to reducing out-migration would be to improve the affordability of housing in the state, particularly for low-income residents."

Joseph Seneca, an economics professor at Rutgers University's Bloustein School of Policy and Planning, said he believes the state would be more prosperous if the cost of living were lower, allowing lower-income people to stay. He said he also was concerned about the current gloomy economic outlook.

"We have an unfolding national recession where costs are going to matter ... and there are going to be reductions in income ... ," Seneca said. "It changes a tight labor market into a weak labor market."

Gov. Jon Corzine lauded the results, saying it shows "people are not fleeing the state at the accelerated rates that some pundits would have us believe."

In a statement, Corzine added, "What this study shows is that migration is a byproduct of prosperity and not tax policy. At a time when the fundamentals of our national economy are faltering, this is positive news for New Jersey."

The study was produced by Douglas Massey, a professor at the Woodrow Wilson school, along with graduate students Cristobal Young and Charles Varner. They compiled and evaluated statistics from the U.S. Census Bureau and the New Jersey Division of Taxation's individual resident tax data.

Based on the results, they also determined the "modest net outflow of labor supply has been beneficial for workers and job-seekers" in New Jersey, with unemployment in part being transported to other states. But they concluded more study is required to understand the fiscal impact of the state's net loss of residents since at least the early 1990s.

"For example, adding one million people would greatly strain government services and amenities while also presumably bringing in additional tax revenues," according to the study. "In a very densely populated state like New Jersey, population growth may be more costly and difficult to manage than out-migration."