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Working Paper, No. 2016-09, 2016
Accounting for Central Neighborhood Change, 1980-2010 (REVISED November 2019)

After 1980-2000 population decline and economic stagnation, downtown neighborhoods in most large US cities experienced 2000-2010 population growth and gentrification. Stark racial differences in valuations of downtown amenities and suburban labor market opportunities among those with less than college that only emerged after 2000 are the primary drivers of these downtown neighborhood dynamics. As college-educated whites moved in, increases in valuations of downtown amenities encouraged other whites to remain in downtowns, a reversal from prior decades. Continued departures of less than college educated minorities were driven both by relative improvements in suburban employment opportunities for this group and their continued declines in valuations of downtown amenities. Our evidence highlights the importance of racial differences in valuations of potentially endogenous local amenities for understanding recent downtown gentrification.

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