The Consequences of Gentrification: A Focus on Residents’ Financial Health in Philadelphia

40 Pages Posted: 10 Aug 2016

See all articles by Lei Ding

Lei Ding

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Jackelyn Hwang

Princeton University

Date Written: 2016-07-29

Abstract

There have been considerable debate and controversy about the effects of gentrification on neighborhoods and the people residing in them. This paper draws on a unique large-scale consumer credit database to examine the relationship between gentrification and the credit scores of residents in the City of Philadelphia from 2002 to 2014. We find that gentrification is positively associated with changes in residents’ credit scores on average for those who stay, and this relationship is stronger for residents in neighborhoods in the more advanced stages of gentrification. Gentrification is also positively associated with credit score changes for less advantaged residents (low credit score, older, or longer term residents, and those without mortgages) if they do not move, though the magnitude of this positive association is smaller than for their more advantaged counterparts. Nonetheless, moving from gentrifying neighborhoods is negatively associated with credit score changes for less advantaged residents, residents who move to lower-income neighborhoods, and residents who move to any other neighborhoods within the city (instead of outside the city) relative to those who stay. The results demonstrate how the association between gentrification and residents’ financial health is uneven, especially for less advantaged residents.

Keywords: Gentrification, Credit scores, Residential mobility

JEL Classification: D14, J11, J6, R23

Suggested Citation

Ding, Lei and Hwang, Jackelyn, The Consequences of Gentrification: A Focus on Residents’ Financial Health in Philadelphia (2016-07-29). FRB of Philadelphia Working Paper No. 16-22, Available at SSRN: https://ssrn.com/abstract=2820959

Lei Ding (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Jackelyn Hwang

Princeton University

22 Chambers Street
Princeton, NJ 08544-0708
United States

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