Working Paper 13 - 07 May 2013 The Long - Term Employment Impacts of Gentrifi cation in the 1990 s

Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded offi cial Federal Reserve Bank of Cleveland publications. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. In the ongoing debate over the social benefi ts and costs of gentrifi cation, one of the key questions left largely unaddressed by the empirical literature is the degree to which gentrifi cation impacts local labor markets. This paper begins by exploring the nature of employment change in one archetypical gentrifying neighborhood—Chicago's Wicker Park—to motivate the central hypothesis that gentrifi cation is associated with industrial restructuring. Next, a detailed analysis is presented on the long-term employment changes in neighborhoods that have experienced gentrifi cation during the 1990s across a sample of 20 large central cities. Specifi cally, this paper uses Freeman's (2005) defi nition to defi ne tracts that experienced gentrifi cation and compares employment outcomes in such tracts and those within a ¼ mile buffer to comparable nongentrifi ed tracts. This analysis shows that employment grew slightly faster in gentrifying neighborhoods than other portions of the central city. However, jobs in restaurants and retail services tended to replace those lost in goods-producing industries. This process of industrial restructuring occurred at a faster rate in gentrifying areas. Thus gentrifi cation can be considered a contributory and catalytic factor in accelerating the shift away from manufacturing with urban labor markets. JEL code: R31.