Gentrification, displacement, and income trajectory of incumbents

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.