Within-city Variation in Urban Decline: The Case of Detroit

A nice paper on Detroit’s decline. Does the whole city decline or some parts decline more than others? If it is latter case, which parts decline more and why?

When a city experiences a decline in income or population, do all neighborhoods within the city decline equally? Or do some neighborhoods decline more than others? What are the characteristics of the neighborhoods that decline the most? We answer these questions by looking at what happened to neighborhoods within Detroit as the city experienced a sharp decline in income and population from the 1980s to the late 2000s.

The declines in population and income were not experienced uniformly across the census tracts within Detroit. The poorest census tracts experienced the largest declines in population while it was the rich census tracts that experienced the largest declines in income. In particular, it was the relatively rich neighborhoods that were in close proximity to the richest neighborhoods that experienced the biggest income declines.

The authors actually had a model which looks at a rising city. They applied the same to Detroit to show the model works in reverse as well. So what does rising city show?

We view our analysis through the recently developed model of Guerrieri, Hartley and Hurst (2011)—henceforth GHH….A key prediction of this model is that in response to a positive population or income shock at the city level, the new influx of richer residents will choose to locate in the poorer neighborhoods that border the richer neighborhoods so as to maximize their consumption of the positive neighborhood amenities. In GHH, we refer to this process as endogenous gentrification. We then provide a variety of evidence showing that in response to positive city-wide labor demand shocks, such as an influx of richer residents, the poor neighborhoods that border the rich neighborhoods experience the greatest increase in housing prices within the city because they are the neighborhoods that gentrify (poor residents exit and richer residents migrate in).

They reverse this positive settlement shock  to what happened in Detroit which was a negative shock. And the results show the model works in reverse as well. So in positive shock the poor neighborhoods close to rich ones gain as people come in… In a negative shock, the same neighborhood closest to rich one declines as people leave…

This decline of Detroit city is so interesting that one can keep reading as much on it. From a hope city to an almost hopeless one, it has been an amazing journey..

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