The Consequences of Gentrification: A Focus on Residents’ Financial Health in Philadelphia

Lei Ding
Federal Reserve Bank of Philadelphia

Jackelyn Hwang
Princeton University

The views expressed in this article are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.

Considerable debate and controversy continue regarding the effects of gentrification on neighborhoods and the people residing in them. This article draws on a unique largescale consumer credit database to examine the relationship between gentrification and the credit scores of residents in the city of Philadelphia from 2002 to 2014. We find that gentrification is positively associated with changes in residents’ credit scores, on average, for those who stay, and this relationship is stronger for residents in neighborhoods in the more advanced stages of gentrification. Gentrification is also positively associated with credit score changes for less-advantaged residents (those with low credit scores, older residents, longer-term residents, or those without mortgages) if they do not move, though the magnitude of this positive association is smaller than for their more advantaged counterparts. Nonetheless, moving from gentrifying neighborhoods is negatively associated with credit score changes for less-advantaged residents, residents who move to lower-income neighborhoods, and residents who move to any other neighborhoods within the city (instead of outside the city) relative to those who stay. The results demonstrate how the association between gentrification and residents’ financial health is uneven, especially for less-advantaged residents.