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Research Department Working Papers

The Rising Value of Time and the Origin of Urban Gentrification

No. 1913
Yichen Su

Abstract: In recent decades, gentrification has transformed American central city neighborhoods. I estimate a spatial equilibrium model to show that the rising value of high-skilled workers’ time contributes to 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 the value of time has a modest direct effect on gentrification of central cities, the effect is substantially magnified by endogenous amenity improvement driven by the changes in local skill mix.

DOI: https://doi.org/10.24149/wp1913

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