On Urban Redevelopment, Jobs and the Local Economy: Displacement or Local Incubator?

Local urban redevelopment policy measures which entail the transformation of obsolete inner-city industrial areas target the local economy by bringing jobs and prosperity to the neighborhood. These transformed areas attract higher-income households into the neighborhood, bringing about a new era of gentrification and local jobs. The influx of spending power subsequently boosts the local economy. The policy issue is whether urban redevelopment constitutes an incubator or spurs a displacement of jobs. The outcome is far-reaching as considerable amounts of public funds are utilized to shape the urban economy. If redevelopment would spur a displacement of jobs, then this would crowd-out jobs in other neighborhoods. The topic of this research is to identify the causal linkage between urban redevelopment and the local economy. Transforming urban areas entails a place-based treatment to the local economy (Koster and Van Ommeren, 2019). Local transformation and the redevelopment of unused industrial cultural heritage have been undertaken in many cities in many countries. For example, more than 200 sites have been redeveloped in the Netherlands over the last twenty years. Instead of leaving the cultural heritage unused, or clearing the sites to make place for new development, policy makers choose for the option of redevelopment because they argue two positive externalities will result from it. First, the redevelopment of cultural heritage is said to positively impact the living environment of the surrounding areas due to the unique esthetics and character of cultural heritage. Second, the redevelopment is also said to positively impact the local economy by providing unique workplaces that will attract firms from the creative sector, who generate local spillovers. Remarkably, few studies have tried to evaluate these externalities empirically. This is particularly important since the presumed externalities are used to justify large public place-based investments. The aim of this study is to investigate the impact of redevelopment projects on the local economy. We propose a modeling framework to study the direct and indirect effects of the redevelopment projects. We examine micro level data on registered firms and employment in the Netherlands covering the period 1996-2016. We combine the jobs data with a dataset covering 188 urban redevelopment projects. We demonstrate that the spatial detail of the data, in combination with the use of GIS software, provides information on exact numbers of jobs present within a redevelopment project, as well as its surrounding area. Preliminary findings suggest that the redevelopment of cultural heritage results in a positive direct effect on employment within the site that is redeveloped. Only a small fraction of the jobs that are created within the redevelopment projects are within the creative industries. This is interesting since this is the sector that is expected to be most drawn to cultural heritage, and a sector that theoretically generates large spillovers. Further analyses consider indirect effects of the redevelopment of cultural heritage. This gives insight into whether or not the direct effects of the redevelopment generate positive spillovers for the surrounding area, or displacement of jobs.