How the Gem City Lost Its Luster and How It Can Get It Back: A Case Study of Dayton, Ohio

67 Pages Posted: 23 Jan 2018

Date Written: January 15, 2018


This study examines the economic, demographic, and fiscal history of Dayton, Ohio, from the turn of the 20th century to the present. The purpose of this study is to place Dayton in the context of a declining manufacturing city that must overcome substantial challenges if it is going to succeed as a 21st-century city. In many ways Dayton is the archetype of the declining Rust Belt city. Until the 1960s, Dayton was a thriving midwestern manufacturing hub, initially built around waterways and later railroads and surrounded by fertile farmland. In the mid-20th century, southerners migrated northward to take advantage of the job opportunities and higher wages in places like Dayton. Southern racial discrimination and segregation limited educational opportunities for many southern blacks, and this legacy of institutionalized discrimination inhibited the educational attainment of many blacks and contributed to the city’s inability to adapt to changing economic conditions. Highway construction and the nationwide decline in manufacturing also harmed Dayton, and since the 1960s, Dayton and other midwestern cities have experienced declines in population, wages, and home values. The nationwide shift to a service economy has reduced reliance on natural resources, and this, combined with the long-term decline in transportation costs, means that government policies and climate will increasingly decide the economic fate of cities. Dayton cannot change its physical location, so local officials must compete using policy if Dayton is to have a chance at revitalization.

Keywords: cities, urban development, municipal finance, regional development, urban history, history of cities

JEL Classification: R11, R51, R58, O18, N9

Suggested Citation

Millsap, Adam, How the Gem City Lost Its Luster and How It Can Get It Back: A Case Study of Dayton, Ohio (January 15, 2018). Mercatus Research Paper, 2017. Available at SSRN: or

Adam Millsap (Contact Author)

Charles Koch Institute ( email )

Arlington, VA 22201
United States

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