The long term employment impacts of gentrification in the 1990s

•This paper quantifies the association between gentrification and employment changes.•Gentrification is associated with a small, yet uneven amount of employment growth.•Employment increases in restaurants and services.•However, gentrification decreases jobs in the manufacturing and wholesale sectors.•Gentrification accelerates industrial shifts in urban labor markets.

In the ongoing debate over the social benefits and costs of gentrification, one of the key questions left largely unaddressed by the empirical literature is the degree to which gentrification 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 gentrification is associated with industrial restructuring. Next, a detailed analysis is presented on the long-term employment changes in neighborhoods that have experienced gentrification during the 1990s across a sample of 20 large central cities. Specifically, this paper uses Freeman's (2005) definition to define tracts that experienced gentrification and compares employment outcomes in such tracts and those within a ¼ mile buffer to comparable non-gentrified 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 gentrification can be considered a contributory and catalytic factor in accelerating the shift away from manufacturing within urban labor markets.