The Effect of Income Inequality on Gentrification in US Urban Counties

Urban areas in the US have been experiencing a rise in gentrification in recent years. Gentrification can revitalize a city center and increase tax revenues for the local government at the expense of displacing the poor from their homes, moving them further out from the city center. A large body of literature have extensively studied the causes and consequences of urban gentrification; however, most focused in the gentrification of downtown areas. Little is known about the relationship between rising income inequality and the rate of gentrification in the metropolitan areas of the US. Using county- and census tract-level data, I look at whether the rise in income inequality from the 1980s is associated with the rise in the rate of gentrification in US urban counties. I find that there is a positive association between the share of total income going to the richer segment of the population, and the subsequent rise in the rate of gentrification of an urban county. The rise in the share of total income received by the bottom quintile of income distribution does not correlate with gentrification rates.