Environmental Gentrification

Timmins, Christopher D

Wang, Wen

2020-06-09T18:00:15Z

2021-05-27T08:17:18Z

2020

Economics

This dissertation is an empirical study of gentrification. Chapter 2 studies the link between gentrification and displacement, identifying the social groups most likely to be displaced and the impacts on those displaced groups using reduced form analysis. Chapters 3 turns to model residents' re-optimization decisions in housing market, investigating the welfare impacts and distributional consequences of environmental gentrification. Chapter 4 extends the distributional analysis into dual market sorting including both housing market and labor market.

Over the past several decades, cities across the U.S. have experienced gentrification and the associated socio-demographic shifts. With urban policies and shocks come to improve neighborhood conditions, neighborhood improvements lead to property market appreciation and further trigger gentrification. As this phenomenon has accelerated, concerns about gentrification-induced displacement and its impacts on incumbent residents have grown. Residents of different tenure status (renting vs. owning) and socioeconomic conditions are differently impacted by neighborhood improvements induced property market responses and also value neighborhood improvements quite differently. The possibility that property market appreciation and residential sorting make environmental improvements onerous for some residents suggests the potential of an urban policy which intended to offer welfare gain to low-income residents and renters by improving their living conditions, may actually make them worse off moving into worse neighborhood due to property market changes and residential sorting and further exacerbate social inequality and make vulnerable groups have less future outcome.

Chapter 2 studies the link between gentrification and displacement, identifying the social groups most likely to be displaced and the impacts on those displaced groups. The results provide evidence of displacement, showing that lower-income renters are significantly more likely to exit from gentrifying neighborhoods. Moreover, they tend to move to neighborhoods with significantly lower school quality and higher crime rates and have a higher probability of changing jobs and receiving lower incomes. Owners, however, are more likely to remain in gentrifying neighborhoods, benefiting from the increased amenities and rising home values. In stark contrast to renters, when these owners do move, they convert those capital gains into improved living conditions. These results provide direct evidence of how housing tenure defines the welfare consequences of environmental improvements.

Chapter 3 measures the differential welfare impacts of environmental policies across household groups. To account for property market responses and re-optimization of residential housing decisions, a dynamic model of housing decisions with endogenous tenure status (renting vs. owning) and forward-looking residents is used. The model extends the distributional analysis in four previously overlooked dimensions: differential impacts of property market appreciation on renters and owners, preference heterogeneity over public amenities, wealth accumulation corresponding to property market changes, and expectations in dynamic housing decisions. The model is estimated taking advantage of an exogenous and unexpected environmental shock and employing a unique data set (L.A.FANS Data) tracking residents? locations and tenure choices in Los Angeles County from 2000 to 2007. The results show that environmental improvements have regressive welfare impacts and favor owners more than renters. Welfare impacts can be reduced for renters and can be changed from positive to negative for low-income renters incorporating housing market responses and residential sorting. In contrast, owners of all incomes benefit more due to the capitalization of environmental improvements incorporating housing market responses. Provided that renters are more likely to be low-income earners and people of color, the differential welfare results in this paper raise the concern of environmental justice in policy design and evaluations.

Except environmental shocks/policies as the drivers of gentrification, the public sector can play an important role in neighborhood transformation through investing in physical infrastructure, structuring land use decisions, and incentivizing local business, which impact residents' choice in both housing market and labor market. Chapter 4 investigate the role of public transportation investment (new rail transit lines) on neighborhood gentrification. The massive investment in metro rail transit aims to reduce congestion and pollution, to improve transit access to regional amenities and work opportunities. It can also spur housing appreciation and labor market expansion, which induce residents' re-optimization in both housing market and labor market. Evidence show that construction of new metro rail lines increases public transportation users in both tracts with new metro rail stations and tracts with interacting metro rail stations, increase local housing price and expand residents' choice set in labor market. This paper will further develops a structural model to investigate residents' re-optimization in both housing market and labor market corresponding to neighborhood changes induced by transportation improvements to access the potential distributional impacts of transportation infrastructure improvement on residents' welfare.

https://hdl.handle.net/10161/21022

Economics

Environmental Gentrification

Dissertation

11.572602739726028