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The Consequences of Gentrification: A Focus on Residents’ Financial Health in Philadelphia

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  • Lei Ding
  • Jackelyn Hwang

Abstract

There have been considerable debate and controversy about the effects of gentrification on neighborhoods and the people residing in them. This paper draws on a unique large-scale consumer credit database to examine the relationship between gentrification and the credit scores of residents in the City of Philadelphia from 2002 to 2014. We find that gentrification is positively associated with changes in residents? credit scores on average for those who stay, and this relationship is stronger for residents in neighborhoods in the more advanced stages of gentrification. Gentrification is also positively associated with credit score changes for less advantaged residents (low credit score, older, or longer term residents, and those without mortgages) if they do not move, though the magnitude of this positive association is smaller than for their more advantaged counterparts. Nonetheless, moving from gentrifying neighborhoods is negatively associated with credit score changes for less advantaged residents, residents who move to lower-income neighborhoods, and residents who move to any other neighborhoods within the city (instead of outside the city) relative to those who stay. The results demonstrate how the association between gentrification and residents? financial health is uneven, especially for less advantaged residents.

Suggested Citation

  • Lei Ding & Jackelyn Hwang, 2016. "The Consequences of Gentrification: A Focus on Residents’ Financial Health in Philadelphia," Working Papers 16-22, Federal Reserve Bank of Philadelphia, revised 29 Jul 2016.
  • Handle: RePEc:fip:fedpwp:16-22
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    References listed on IDEAS

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    More about this item

    Keywords

    Credit scores; Gentrification; Residential mobility;

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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