Revitalizing poor neighborhoods: Gentrification and individual mobility effects of new large-scale housing construction

Using almost three decades of full-population register data with detailed geo-coded information on how and where all individuals in Sweden live, on their moving patterns, and on their socio-economic characteristics, this paper examines if new large-scale housing construction is a suitable policy tool for revitalizing poor neighborhoods. The answer is yes. We reach four main conclusions. First, we find that new large developments of market-rate condominiums have strong gentrifying effects: the estimated effect on average income is 15% in the poorest quartile of neighborhoods. Second, the effect is not only driven by richer people moving into the newly built owned apartments, but also by average income rising by 10% in pre-existing homes. Since we do not find other concurrent housing-stock changes such as renovations and rent increases, this indicates that the areas become more attractive. Third, most of the gentrifying effects are due to high-income people moving in from richer areas outside a wider neighborhood. Fourth, we do not find any displacement of incumbent residents.