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Gentrification and Retail Churn: Theory and Evidence

Author

Listed:
  • 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.

Suggested Citation

  • Edward L. Glaeser & Michael Luca & Erica Moszkowski, 2020. "Gentrification and Retail Churn: Theory and Evidence," NBER Working Papers 28271, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28271
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    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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