Gentrification and Opportunity Zones: A Study of 100 Most Populous Cities with D.C. as a Case Study

Abstract

This article explores the role of gentrification in the selection of Opportunity Zone (OZ) census tracts, as well as the potential impact of OZ on gentrification in the 100 most populous urban areas in the United States and in Washington, D.C. It analyzes the role of gentrification in the selection of OZ census tracts in 100 core-based statistical areas (CBSAs). A CBSA is a geographic area defined in terms of counties, which consists of an urban area of at least 10,000 population and its surrounding socially and economically integrated areas. Next, we test whether gentrification has differential impacts on economic activity in OZ and non-OZ neighborhoods in the 100 most populous metropolitan areas. If so, we then use the District of Columbia (D.C.) as a case study to analyze the impact of gentrification on migration in D.C. and predict the impact of economic activity in OZ-eligible neighborhoods. We construct an education based gentrification measure to analyze the relationship between OZs and gentrification in CBSAs. Our descriptive analysis of the 100 most populous urban areas in the United States (100 CBSAs) indicates that, although it appears that gentrified census tracts were not favored to receive OZ designation, the statistical relationships between gentrification and business and residential vacancy rates are stronger in OZ-designated tracts. In D.C., we find that gentrification has been spreading to more neighborhoods in OZ eligible neighborhoods. Using administrative data from the D.C. government, we find that in-migration rates of higher income residents are significantly higher compared to their out-migration rates. We examine OZ eligible census tracts to understand the expected destination of new investment, measured as the number of permits, and find that census tracts with positive net migration and lower business vacancy rates are likely to receive increased financing.