The Determinants of Gentrification

Abstract

This paper assesses why lower-income urban neighborhoods gentrify. Over the period 1980-2000, gentrification was more likely in Census tracts that are closer to the city center and have older housing stock, consistent with theoretical predictions from classic urban models and with other recent empirical work on gentrification.

The paper makes three contributions. First, neighboring tract income is shown to contribute to gentrification, providing evidence of positive inter-neighborhood spillovers. Second, the reasons for gentrification are shown to vary across cities: proximity to the city center and an older housing stock contribute more to tract-level gentrification in metropolitan areas where these characteristics are scarce - larger and newer metropolitan areas, respectively. Accordingly, U.S. regions vary in how well their cities fit the general pattern of gentrification: cities in the South and Midwest exhibited gentrification over the period 1990-2000, whereas gentrification was characteristic only of the Northeast over the period 1980-1990. Finally, gentrification is accompanied by increases in the number of households and a growing housing stock, as well as changes in residential demographic composition.

The analysis relies on the Neighborhood Change Database, which provides tract-level decennial Census data recalculated using a consistent definition of tract boundaries.

Keywords: gentrification, neighborhood, housing, urban, land use

JEL Classification: R11, R14, R21, R23