Source: Census Bureau / Washingtopost.com

On a previous post on urban decline I explored the increasing trend of declining cities in Europe and Central Asian countries. Many of the urban systems in the region have experienced an important decline of their population. This decline has been partly associated to the transition period in which previously protected city-industries saw the base of their economy crumble under market competition; similar to the labor-demand shocks observed in Detroit with the car industry. The urban decline in Europe and Central Asia is however also linked to an important out-migration and an overall decline of the countries’ population. For example, between 1989 and 2013, Ukraine’s total population declined by 12 percent (by 9 percent in urban areas and 19 percent in rural areas). During the same period, it is estimated that 83 percent of Ukrainian cities lost population.

But why is it important to study urban decline? At the city-level, urban population decline can have important consequences in terms on municipal finances and basic service provision. For instance a homogeneous decline of a city’s population across its existing footprint – meaning that all neighborhoods lose population equally – leads to a declining population density which can make existing urban transport options less financially sustainable. Furthermore, a deterioration of municipal services can make a city less attractive than its peers which could lead to a further reduction of its population (snow-ball effect).

There is also an increased interest in analyzing the city-level distributional consequences of urban population decline. For instance, are there differences in income between the ones leaving and the ones being left behind? And more importantly are the urban poor disproportionally affected by urban decline? Most studies suggests that the urban rich are more likely to leave after a negative city-wide labor-demand shock but that population decline lowers housing demand and ultimately leads to  lower housing prices. The urban poor – who are left behind – are considered to benefit as housing becomes more affordable. Others argue that the decline in housing prices is also a reflection of the decline in the quality of amenities (e.g. schools and quality of education) which could have important short and long-term welfare consequences on those being left behind (which are disproportionally poor).

A recent study by Veronica Guerrieri, Daniel Hartley and Erik Hurst (definitely worth reading if you have some time!), brings some light to some of these questions. The study looks in detail at the case of Detroit and analyzes the neighborhood-level consequences of urban decline between 1980 and 2009. Their main question is whether Detroit experienced a homogenous decline in income and population across its territory or if there are visible differences across neighborhoods. They find that in the case of Detroit decline in population and income is not uniform across the territory.

In fact the largest population decline was found in the formerly poor neighborhoods while the smallest in the formerly rich neighborhoods. However this is not a reflection of the poor leaving the city but of the poor moving with-in the city. In fact the largest declines in income came from the former richest neighborhoods and more specifically in the relatively rich areas that were in close proximity to the richest neighborhoods. This is known as reverse gentrification in which the borders of rich neighborhoods close inwards as poorer residents move in. The authors explain that as the city experiences urban decline the remaining residents want to locate nearer to richer residents to maximize their consumption of neighborhood amenities. Falling prices allow poor households to move to formerly middle-income neighborhoods.

I believe the policy implications of this article are important. If mayors of declining cities can predict which neighborhoods will experience the highest population declines, they might be able to put policies in place (i.e. concentrating resources in those areas) that foster the further densification and concentration of the population in these areas (i.e. avoiding urban sprawl under urban decline). However, it would be interesting to see what happens in a context of less socially segregated cities and in a context of high ownership rates which restrict mobility – both reflect more the urban context of post-communist cities in Europe and Central Asia.

More information on the case of Detroit and related papers can be found in the links below;

Within-City variation in urban decline: The Case of Detroit: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1997368

Urban decline in rust-belt cities: http://www.clevelandfed.org/research/commentary/2013/2013-06.cfm

Six maps that show people abandoning Detroit: http://www.washingtonpost.com/news/storyline/wp/2014/08/15/six-maps-that-show-people-abandoning-detroit

Endogenous Gentrification and Housing Price Dynamics: http://www.nber.org/papers/w16237

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