The effects of urban redevelopment on households

Abstract

Many municipalities are beginning to play a more central and active role in slowing and reversing the process of the economic stagnation of business and commerce within their cities. Many municipalities combat these problems through the use of providing existing businesses or start up businesses with financial assistance or incentives. Economic theory shows us that a firm’s decision on production and location is influenced by fiscal incentives that are afforded to them. This paper explores the external effects of municipally assisted redevelopment programs. This analysis strives to broaden our understanding of businesses redevelopment programs to include not just the impacts on the commercial side, but see the total effects which include the residential side as well. It analyzes key economic indicators of households who reside within and directly around publicly assisted redevelopment areas and compares these indicators to their non-redeveloped area counterparts. Specifically, it empirically examines the impact of redevelopment on house values and unemployment rates in seven large Midwestern cities: Des Moines, Wichita, Kansas City, St. Louis, Lincoln, Omaha, and Milwaukee, using census data at the block group and census tract levels. I find that redevelopment has a substantial impact in increasing house values and reducing unemployment rates in the vicinity of the redevelopment projects.