Working Paper: NBER ID: w28271
Authors: Edward L. Glaeser; Michael Luca; Erica Moszkowski
Abstract: How does gentrification transform neighborhood retail amenities? This paper presents a model in which gentrification harms incumbent resident by increasing rental costs and by eliminating distinctive local stores. While rising rents can be offset with targeted transfers, the destruction of neighborhood character can – in principle – reduce overall social surplus. Empirically we find that gentrifying neighborhoods experience faster growth in both the number of retail establishments and business closure rates than their non-gentrifying counterparts. However, we see little evidence that gentrification is associated with changes in retail mix or prices – suggesting limited welfare losses.
Keywords: No keywords provided
JEL Codes: H75; J15; L81; R30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| gentrification (R23) | increase in rental costs (R21) |
| increase in rental costs (R21) | harm to incumbent residents (R28) |
| gentrification (R23) | destruction of neighborhood character (R20) |
| destruction of neighborhood character (R20) | reduction in overall social surplus (D61) |
| gentrification (R23) | increase in number of retail establishments (L81) |
| gentrification (R23) | increase in business closure rates (M13) |
| increase in number of retail establishments (L81) | increase in business openings (M13) |
| gentrification (R23) | limited changes in retail mix or prices (D43) |