Gentrification and Neighborhood Change: Evidence from Yelp

64 Pages Posted: 23 Dec 2020

See all articles by Edward L. Glaeser

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Michael Luca

Harvard University - Business School (HBS)

Erica Moszkowski

Harvard University - Business School (HBS)

Multiple version iconThere are 2 versions of this paper

Date Written: December 18, 2020

Abstract

How does gentrification transform neighborhoods? Gentrification can harm current residents by increasing rental costs and by eliminating old amenities, including distinctive local stores. Rising rents represent redistribution from tenants to landlords and can therefore be offset with targeted transfers, but the destruction of neighborhood character can – in principle – reduce overall social surplus. Using Census and Yelp data from five cities, we document that while gentrification is associated with an increase in the number of retail establishments overall, it is also associated with higher rates of business closure and higher rates of transition to higher price points. In Chicago and Los Angeles especially, non-gentrifying poorer communities have dramatically lower turnover than richer or gentrifying communities. However, the primary transitions appear to the replacement of stores that sell tradable goods with stores that sell non-tradable services. That transition just seems to be slower in poor communities that do not gentrify. Consequently, the business closures that come with gentrification seem to reflect the global impact of electronic commerce more than the replacement of idiosyncratic neighborhood services with generic luxury goods.

Suggested Citation

Glaeser, Edward L. and Luca, Michael and Moszkowski, Erica, Gentrification and Neighborhood Change: Evidence from Yelp (December 18, 2020). Harvard Business School NOM Unit Working Paper No. 21-074, Available at SSRN: https://ssrn.com/abstract=3751621 or http://dx.doi.org/10.2139/ssrn.3751621

Edward L. Glaeser

Harvard University - Department of Economics ( email )

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Michael Luca (Contact Author)

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Erica Moszkowski

Harvard University - Business School (HBS) ( email )

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