NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Bright Minds, Big Rent: Gentrification and the Rising Returns to Skill

Lena Edlund, Cecilia Machado, Maria Micaela Sviatschi

NBER Working Paper No. 21729
Issued in November 2015
NBER Program(s):   LS

In 1980, housing prices in the main US cities rose with distance to the city center. By 2010, that relationship had reversed. We propose that this development can be traced to greater labor supply of high-income households through reduced tolerance for commuting. In a tract-level data set covering the 27 largest US cities, years 1980-2010, we employ a city-level Bartik demand shifter for skilled labor and find support for our hypothesis: full-time skilled workers favor proximity to the city center and their increased presence can account for the observed price changes, notably the rising price premium commanded by centrality.

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This paper was revised on January 4, 2016

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21729

 
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