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Saturday, May 31, 2008

"Who Gentrifies Low-Income Neighborhoods?"

This examines the distributional impacts of gentrification. The results may not be what you expect:

Who Gentrifies Low-Income Neighborhoods?, by Terra McKinnish, Randall Walsh, and Kirk White NBER Working Paper No. 14036 May 2008 JEL No. J15,J60,R23 [Open Link]: Abstract This paper uses confidential Census data, specifically the 1990 and 2000 Census Long Form data, to study the demographic processes underlying the gentrification of low-income urban neighborhoods during the 1990's. In contrast to previous studies, the analysis is conducted at the more refined census-tract level with a narrower definition of gentrification and more closely matched comparison neighborhoods. The analysis is also richly disaggregated by demographic characteristic, uncovering differential patterns by race, education, age and family structure that would not have emerged in the more aggregate analysis in previous studies. The results provide no evidence of displacement of low-income non-white households in gentrifying neighborhoods. The bulk of the increase in average family income in gentrifying neighborhoods is attributed to black high school graduates and white college graduates. The disproportionate retention and income gains of the former and the disproportionate in-migration of the latter are distinguishing characteristics of gentrifying U.S. urban neighborhoods in the 1990's.

I. Introduction

"Concern, and anger, over gentrification has grown in communities across the country as housing rental and sales prices have soared .… there are numerous reports of resident displacement from neighborhoods long ignored that now attract higher-income households."1 -2006 Urban Institute Report

Over the past several decades, there has been substantial gentrification of low-income neighborhoods in many U.S. urban areas. These neighborhoods typically experience large increases in household income and housing prices. Some laud the revitalization of decayed neighborhoods and others criticize the displacement of low-income, often minority, households.

The distribution of benefits from neighborhood change is a crucial policy issue. Since 1974 the U.S. Department of Housing and Urban Development (HUD) has allocated nearly $120 Billion in Community Development Block Grants.2 These grants, that are intended to benefit low and moderate-income individuals by eliminating slums or blight and addressing urgent community development needs, have been allocated to more than 1000 U.S. cities. While public investment in neighborhood revitalization is ubiquitous, the consequences of neighborhood gentrification for low-income and minority individuals remain an open question.

Advocacy groups for low-income neighborhoods in cities across the U.S. have raised concerns about a potential link between gentrification and the displacement of existing low income and/or minority residents. In contrast, potential displacement from gentrifying neighborhoods does not appear to be a major concern for HUD.3 Given the high levels of public investment in improving neighborhood quality, it is important to understand which of these two policy perspectives accurately reflects the impacts of neighborhood gentrification vis-à-vis displacement of low-income households. Further, missing from this debate on displacement is consideration of both the role of in-migrants and the impacts of gentrification on households that remain in gentrifying neighborhoods.

Surprisingly, many questions regarding the distributional impacts of gentrification remain unanswered. Some recent studies have examined the issue of displacement, and have found little to suggest that low-income households exit gentrifying neighborhoods any faster than they exit other neighborhoods. These studies, however, have been severely constrained by data limitations. As a result they either define neighborhoods as rather large geographic areas (regions on the order of 100,000+ in population), use overly broad definitions of gentrification, and/or focus on a single location – raising issues about what broader inferences can be drawn from their results.4 Even less is known about the role of in-migration in gentrification and the impact of gentrification on residents who remain in neighborhoods that experience gentrification.

In this paper we take advantage of confidential Census data, specifically the 1990 and 2000 Census Long Form Data, to provide the richest study of gentrification to date. Overall, we find that rather than dislocating non-white households, gentrification creates neighborhoods that are attractive to middle-class minority households, particularly those with children or with elderly householders. Furthermore, there is evidence that gentrification may even increases incomes for these same households.

Our specific findings are: 1) In-migration of college graduates, particularly white college graduates under 40 without children, is a key characteristic of a gentrifying neighborhood; 2) The presence of children, an elderly householder or a householder with low educational attainment dampens the likelihood that a white household moves into a gentrifying neighborhood, but these same effects are not present, or even reversed, for black and Hispanic households; 3) We finds no evidence of disproportionate exit of low-education or minority householders, but do find evidence that gentrifying neighborhoods disproportionately retain black householders with a high school degree; 4) Decomposition of the total income gains in gentrifying neighborhoods attributes the bulk of the gains to two key groups: black high school graduates (due to disproportionate retention and income gains) and white college graduates (due to disproportionate in-migration and high incomes).

...

VI. Conclusions

... The findings suggest that rather than dislocating non-white households, gentrification creates neighborhoods that are attractive to middle-class minority households, particularly those with children or with elderly householders. One reasonable interpretation is that because these neighborhoods are experiencing income gains, but also more diverse with regards to race/ethnicity and income than established middle-class neighborhoods, they are desirable locations for non-white middle-class households.

    Posted by on Saturday, May 31, 2008 at 12:33 AM in Academic Papers, Economics | Permalink  TrackBack (0)  Comments (19)

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