How Do Neighborhoods Become Wealthy?

A new study by the Federal Reserve Bank of Cleveland examines a “troubling consistency” of neighborhoods—that is that over the past 30 years, the poorest neighborhoods have stayed that way.

Emily Badger details a new study from the Federal Reserve Bank of Cleveland that identifies a trend of urban America: neighborhoods change very little over time with respect to the wealth or poverty of residents.

In summary: “Over the last 30 years, the poorest neighborhoods in urban America have largely remained that way. The depressing realities: Areas that had high unemployment and low average family incomes in 1980 are by and large the same places that had high unemployment and low average family incomes in 2008.”

The real value of the study, according to Badger’s analysis, are the examples provided by neighborhoods where residents did manage to raise their average incomes. “In thinking about how to change the fate of persistently poor neighborhoods, it's helpful to look more closely at what happened in the third of those neighborhoods that did see income growth over this time period.”

The finding of the study: “The areas that saw income growth, however, had significantly higher population density. And by 2008, their total population and density would grow even more.”

Badger acknowledges that “saying that poor neighborhoods in thriving cities fare better than poor neighborhoods in stagnant ones…seems fairly self-evident.” But an important implication emerges from that realization: “Your economic prospects as an individual are influenced by many factors outside of your control…”

The article also raises a final question, “the holy grail” of this direction of inquiry: “Within these previously poor neighborhoods, who is benefiting from the gains in income?”

Full Story: What we know about how poor neighborhoods become wealthier


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