Change and Persistence in the Economic Status of Neighborhoods and Cities

Forthcoming in The Handbook of Regional and Urban Economics. Vol. 5 (Eds. G. Duranton, V. Henderson, W. Strange). Elsevier Science/North Holland

117 Pages Posted: 7 Dec 2014

See all articles by Stuart S. Rosenthal

Stuart S. Rosenthal

Syracuse University - Department of Economics

Stephen L. Ross

University of Connecticut - Department of Economics

Date Written: September 22, 2014

Abstract

This paper reviews recent literature that considers and explains the tendency for neighborhood and city-level economic status to rise and fall. A central message is that although many locations exhibit extreme persistence in economic status, change in economic status as measured by various indicators of per capita income is common. At the neighborhood level, we begin with a set of stylized facts, and then follow with discussion of static and dynamic drivers of neighborhood economic status. This is mirrored at the metropolitan level. Durable but slowly decaying housing, transportation infrastructure, and self-reinforcing spillovers, all influence local income dynamics, as do enduring natural advantages, amenities and government policy. Three recurring themes run throughout the paper: (i) Long sweeps of time are typically necessary to appreciate that change in economic status is common; (ii) history matters; and (iii) a combination of static and dynamic forces ensure that income dynamics can and do differ dramatically across locations but in ways that can be understood.

Keywords: Neighborhood income dynamics; city income dynamics; durable housing; transportation infrastructure; spillovers; persistence, path dependence, and cycles.

JEL Classification: R0, R1, R2, R3, R4

Suggested Citation

Rosenthal, Stuart S. and Ross, Stephen L., Change and Persistence in the Economic Status of Neighborhoods and Cities (September 22, 2014). Forthcoming in The Handbook of Regional and Urban Economics. Vol. 5 (Eds. G. Duranton, V. Henderson, W. Strange). Elsevier Science/North Holland, Available at SSRN: https://ssrn.com/abstract=2534255

Stuart S. Rosenthal

Syracuse University - Department of Economics ( email )

426 Eggers Hall
Syracuse, NY 13244-1020
United States
315-443-3809 (Phone)

Stephen L. Ross (Contact Author)

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-3533 (Phone)
860-486-4463 (Fax)

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