The Rising Value of Time and the Origin of Urban Gentrification

By Yichen Su, here is more from the AEA meetings:

I estimate a spatial equilibrium model to show that the rising value of high-skilled workers’ time is an important driving force behind the gentrification of American central cities. I show that the increasing value of time raises the cost of commuting and exogenously increases the demand for central locations by high-skilled workers. While change in value of time is an initial force behind gentrification, its effect is substantially magnified by endogenous amenity improvement. The model implies that welfare inequality in the recent decades increases by more than the rise in earnings inequality if the forces behind gentrification are considered.

You will find other interesting papers on gentrification at this link, for instance: “We find that areas with
more gay and lesbian couples are more likely to experience gentrification.”