Bright Minds, Big Rent: Gentrification and the Rising Returns to Skill

66 Pages Posted: 17 Nov 2016

See all articles by Lena Edlund

Lena Edlund

Columbia University - Graduate School of Arts and Sciences, Department of Economics

Cecilia Machado

Getulio Vargas Foundation (FGV)

María Micaela Sviatschi

Princeton University

Multiple version iconThere are 3 versions of this paper

Date Written: November 1, 2016

Abstract

In 1980, Census data indicate, housing prices in large US cities rose with distance from the city center. By 2010, the relationship had reversed. We propose that this development can be traced to high-income households working longer hours. With little non-market time, proximity to work takes on added salience, leading high-income households to forgo suburban amenities and extending the gentrification trend beyond its 1970s niche status. In a tract-level data set covering the 27 largest US cities, years 1980-2010, we find support for our hypothesis. Using a Bartik-type demand shifter for skilled labor we find that full-time skilled workers favor centrality and the rising share in the population can account for the observed price changes in favor of the city center.

Keywords: Gentrification, Suburbanization, Returns to Skill, Labor Supply, Location Choice

JEL Classification: J13, J24

Suggested Citation

Edlund, Lena and Machado, Cecilia and Sviatschi, María Micaela, Bright Minds, Big Rent: Gentrification and the Rising Returns to Skill (November 1, 2016). US Census Bureau Center for Economic Studies Paper No. CES-WP-16-36R, Available at SSRN: https://ssrn.com/abstract=2871597 or http://dx.doi.org/10.2139/ssrn.2871597

Lena Edlund (Contact Author)

Columbia University - Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States
212-854-5489 (Phone)
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Cecilia Machado

Getulio Vargas Foundation (FGV) ( email )

R. Dr. Neto de Araujo 320 cj 1307
Rio de Janeiro, Rio de Janeiro 22250-900
Brazil

María Micaela Sviatschi

Princeton University ( email )

Princeton, NJ 08544-1021
United States
9176285267 (Phone)
08540 (Fax)

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