Association for Public Policy Analysis & Management

Gentrification is a hot topic among urban economist, urban planners, and city politicians alike. It’s also an emotional topic for many people. Fears of displacement have led many politicians to actively try to quell “gentrification.” While previous research has primarily focused on trying to identify displacement rates of incumbent residents in gentrifying neighborhoods, this paper aims to develop a model that explores the causal mechanisms of gentrification.

Gentrification is commonly considered the process by which highly educated, high income people and families move into areas which had historically been occupied by poor and low educated families. For the analysis in this paper, the degree of gentrification is measured by how much the proportion of a neighborhoods’ college graduates has increased from 2000 to 2014. Recent literature suggests that urban revival is primarily driven by young educated adults’ higher preference, relative to the less educated, for consumption amenities. Examples of “consumption amenities” include boutique cafes, micro breweries, etc. Identification of “amenity” establishments is possible through use of non-public data from the Georgia Department of Labor; these data include exact firm location as well as detailed industry codes. Simultaneous equation modeling tools are used to control for the endogenous nature of the relationship between gentrification and the presence of amenity establishments.

An additional contribution this analysis makes will be to explore whether different definitions of neighborhoods produce different conclusions. Previous gentrification literature has almost entirely focused on a census tract as the definition of a neighborhood. However, using the American Community Survey 5-Year average tables, I am able to explore the implications of defining a neighborhood at the census block group, the smallest geographic unit available with consistent data across years. Estimates at census block group will be compared to estimates at the census tract in order to illustrate whether or not researchers may want to reconsider what constitutes a neighborhood when investigating questions related to gentrification.