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Title: Old Homes and Poor Neighborhoods: A Dynamic Model of Urban Decline and Renewal

Citation Type: Working Paper

Publication Year: 2003

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Abstract: This paper demonstrates that economic decline and renewal is the norm among urban neighborhoods in the United States. But change in neighborhood economic status often proceeds so slowly that many urban dwellers may not perceive their own neighborhood to be part of this process. Nevertheless, the decline in economic status of a given neighborhood is central to theoretical models of filtering in which aging housing stocks are passed down to lower income families. Similarly, renewal of low-income neighborhoods is implied by theoretical models of urban redevelopment. Together, these models suggest that neighborhoods rise and fall, and then rise again over extended periods of time. Moreover, the pace of change can be accelerated or moderated by neighborhood externalities and other attributes of the local community that affect migration of people and capital into and out of the neighborhood. These issues are studied using a unique sample based on census tract data for 29 MSAs. The data spanthe 1950 to 1990 period. The long horizon ensures that slow-moving changes in neighborhood economic status can be observed. Data from all of the years are coded to year-2000 tract-specific geographic boundaries. This ensures consistent geographies over time. Findings indicate compelling support for the idea that neighborhoods move up and down the economic ladder: neighborhood income typically changes by roughly 12 percent of the local MSA income with each passing decade. Additional findings overwhelmingly indicate that rates of change are further influenced by the presence of neighborhoodexternalities: neighborhood attributes associated with local investment in human and physical capital enhance the future economic status of the neighborhood. A host of policy implications follow. For example, results suggest that encouraging homeownership will serve to elevate future neighborhood economic status, while construction of place-based public housing has the opposite effect.

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Authors: Rosenthal, Stuart S.

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Data Collections: IPUMS NHGIS

Topics: Housing and Segregation

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