Neighborhood and Life Chances: How Place Matters in Modern America

Chapter 7. Exploring Changes in Low-Income Neighborhoods in the 1990s

C h a p t e r 7 Exploring Changes in Low-Income Neighborhoods in the 1990s Ingrid Gould Ellen and Katherine O’Regan While there has been much talk of the resurgence of lower-income urban neighborhoods in the United States over the past ten to fifteen years, there has been surprisingly little empirical examination of the extent and nature of the phenomenon.1 Were lower-income urban neighborhoods during the 1990s any more likely to experience gains in income than they were during the 1970s and 1980s? And to the extent that patterns in fact differed during the 1990s, we know even less about what may have driven those differences. Our chapter aims to address these key questions. In the first half, we undertake a broad empirical investigation of income changes in lowincome neighborhoods in U.S. cities during the 1990s, comparing them to the changes that occurred during the two previous decades. Our analysis relies on the Neighborhood Change Database, put together by Geolytics in conjunction with the Urban Institute, which offers a balanced panel of census tracts with consistent boundaries from 1970 to 2000 for all metropolitan areas in the United States. In brief, we find a dramatic reversal in the frequency of income gain for our lowest-income urban neighborhoods during the 1990s. In the previous two decades, such neighborhoods were three times more likely to experience a large loss than a large gain. In the 1990s, this pattern was nearly reversed, with very low-income urban neighborhoods over two and a half times more likely to experience a large gain than a large loss. In the second half of the chapter, we explore some reasons why the fortunes of lower-income urban neighborhoods improved during the 1990s. We focus on three possible explanations: income gains among lower-income households triggered by expansions of the Earned 104 Geographies of Opportunity Income Tax Credit and other poverty policies enacted during the 1990s; investments in place-based housing programs, such as the significant investments made by the Low Income Housing Tax Credit Program; and finally, reductions in urban crime. Background While many have asserted that economic gain among low-income neighborhoods became more common in cities during the 1990s, there is surprisingly little empirical work that supports (or refutes) this claim. Much of the work on neighborhood change examined earlier decades (Aaronson 1997; Bostic and Martin 2003; Fogarty 1977; Galster et al. 2003). Meanwhile, the papers that do include data from the 1990s aim to examine change over a longer time horizon rather than analyzing the patterns evident in the 1990s themselves (see Rosenthal 2006) or focus on changes in the concentration of poverty (see Jargowsky 2003; Kingsley and Pettit 2003). The papers examining changes in the concentration of poverty have consistently found that poverty concentration declined during the 1990s. Jargowsky (2003) found that the number of people living in very high poverty neighborhoods (tracts with poverty rates of at least 40 percent ) declined during the 1990s, reversing a trend of increasing poverty concentration that began in the 1970s. He also reported that the number of high-poverty neighborhoods declined at the same time. Kingsley and Pettit (2003) extended this work to consider a broader share of disadvantaged income tracts (tracts with poverty rates of 30 percent or higher) and confirmed the changes and patterns found by Jargowsky. It is worth noting, however, that these papers focus on a very small share of census tracts—only 10 percent of all metropolitan census tracts in 2000 had poverty rates of over 30 percent, and even fewer had poverty rates of more than 40 percent. We focus on a broader share of neighborhoods —albeit those that are still low income. Unlike these other works, we also focus specifically on neighborhood change in central cities, since concern about neighborhood changes (whether neighborhood decline or gentrification) has typically focused on cities. As for the determinants of neighborhood economic gain, Rosenthal (2006) nicely summarized the competing theories offered in the literature . The first theory follows from the filtering model, which posits that as a neighborhood’s housing stock ages and deteriorates, higher-income residents exit, opting for neighborhoods with newer housing (Muth 1972; Sweeney 1974).2 Eventually, however, after the housing stock reaches a certain threshold age, the housing—and the neighborhood Low-Income Neighborhoods in the 1990s 105 more broadly—is likely to become a...