Panel Paper: When the Neighborhood Goes: The Effects of Gentrification on Individuals and Communities

Thursday, November 8, 2018
Harding - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Devin Bunten, Massachusetts Institute of Technology and Shifrah Aron-Dine, Stanford University

We develop and test a new dynamic framework to understand gentrification and use this framework to study open empirical questions. We identify gentrifiable neighborhoods as those that (i) have attractive exogenous features and (ii) are occupied by low-income residents. When a neighborhood gentrifies, forward-looking house prices should rise in advance of income. We classify gentrifiable neighborhoods as at-risk of impending gentrification if house prices have risen well above incomes, and then document that at-risk neighborhoods see future demographic change consistent with gentrification. We then turn to the open empirical questions. First, we provide evidence that at-risk neighborhoods experience higher rates of out-migration, consistent with displacement. We show that housing construction within at-risk tracts is correlated with higher out-migration, but construction nearby at-risk tracts is correlated with lower out-migration. We also show that out-migration rates are elevated for both likely renters and likely homeowners, although the processes inducing these moves may be different. Finally, we highlight the potential costs beyond displacement that are felt by whole communities--in particular low-income communities and communities of color--when gentrification restricts access to central job-rich transit-oriented neighborhoods.