Community-oriented urban policy and local earnings: A complicated relationship

The literature on regional agglomeration suggests that local economic revitalisation is likely to involve a rise in local wages. In the context of urban regeneration, community-oriented policy envisages to improve prosperity among the residential population of deprived neighbourhoods. Yet, due to an ever-increasing preference of households to reside at central locations this policy may spur gentrification if outsiders are attracted to new jobs and upgraded housing environments. Using Germany as a case study, the analysis explores whether local economies have received a boost that may have affected household sorting and local household income during the past two decades. The study reveals no considerable shift in sorting that would indicate gentrification. With a view to income over the past decade local households with a middle or higher income in programme areas have kept up with overall income growth and lowincome households have experienced zero growth but appear to have thereby performed slightly better than their counterparts elsewhere. Moderate funding of urban regeneration in combination with support to local communities is not capable of providing a remarkable boost, but it may bring about improvements for the residential population without accelerating gentrification.