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Gentrification and the Rising Returns to Skill

Lena Edlund, Cecilia Machado, Maria Micaela Sviatschi

NBER Working Paper No. 21729
Issued in November 2015, Revised in January 2019
NBER Program(s):Labor Studies Program

In 1980, housing prices in large US cities rose with distance from the city center. By 2010, that relationship had reversed. We propose that the inversion can be traced to more hours worked by the skilled. Scarce non-market time downgrades the importance of residential space and upgrades that of proximity to work, factors favoring the central-city location. Geo- coded census micro data covering the 27 largest US cities and the period 1980-2010 support our hypothesis: full-time skilled workers are more likely to locate in the city center and their growth can account for the observed price changes.

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Document Object Identifier (DOI): 10.3386/w21729

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