Gentrification, displacement, and income trajectory of incumbents

TL;DR

This study investigates the impact of gentrification on incumbent residents in Canadian neighborhoods, finding no evidence of displacement or negative income effects, possibly due to legal protections and neighborhood stability.

Contribution

It provides empirical evidence that gentrification does not necessarily lead to displacement or income decline among incumbent residents, challenging common assumptions.

Findings

No displacement effects observed for low-income households.

Gentrifying neighborhoods see longer resident retention.

No adverse impact on residents' income trajectories.

Abstract

Gentrification is associated with rapid demographic changes within inner-city neighborhoods. While many fear that gentrification drives low-income people from their homes and communities, there is limited evidence of the consequences of these changes. I use Canadian administrative tax files to track the movements of incumbent workers and their income trajectory as their neighborhood gentrifies. I exploit the timing at which neighborhoods gentrify in a matched staggered event-study framework. I find no evidence of displacement effects, even for low socioeconomic status households. In fact, families living in gentrifying neighborhoods are more likely to stay longer. I suggest that this might be related to tenant rights protection laws. When they endogenously decide to leave, low-income families do not relocate to worse neighborhoods. Finally, I find no adverse effects on their income trajectory, suggesting no repercussions on their labor market outcomes.