Why Gentrification is Beneficial to the Economy

Introduction 

While strolling through a city, many people can easily identify whether they are walking into a gentrification or not. However, people are always divided on the impacts of gentrification with many economists considering it to have negative impacts on the lives of the poor while others consider it an economic growth. According to Huynh and Maroko (2014), many high-income individuals are constantly moving to new neighborhoods to revitalize with new homes and houses while at the same time citizens of low income are moving out of the neighborhoods and relocating to the new places where they can fit their needs. While many people especially the high-income individuals are considered to benefit highly from the process, some economists also argue that gentrification symbolizes a great threat to the low-income families. This has raised heated debate among many scholars with each group providing reasons for their stand ( Ha , 2015). However, many scholars and researchers have conducted studies and found that gentrification can lead to new job opportunities, stability, reduced crime rates, increased revenue as well as infrastructure development which in overall leads to economic development. 

Job Creation 

As new high-income people move to the neighborhoods, new businesses are opened up. The high-class individuals come in with more income and capital which they use to open up new businesses. Research has shown that new hotels, retail businesses as well as new marketing opportunities have been introduced in the neighborhood by the high-class movement into such areas ( Smith & Williams, 2013) . This creates several job opportunities for both the new and the original inhabitants. Some of the low-income individuals get jobs at the hotels as cashiers, chefs, and cleaners. This enables these people to increase their income level and improve their living standards. The growth movement of high-income people to these areas also provides market opportunities for the original inhabitants as well as the incoming high-class individuals. As the high-class people come in, more income is added to the region and this boosts business. Many people get to venture into entrepreneurship and create self-employment while at the same time employee others. This further boosts the income levels of the original residents and their living standards increases, a situation which is beneficial to the economy. 

The movement of high-class people to the low-income neighborhoods leads to urbanization as more income are invested in the construction of modern houses. With time, such areas initially occupied by low-income individuals experience transformation to the urban center and provides more opportunities for both local and regional trade. When urbanization starts in a region due to high-income individuals investing in the area, trade increases as more people both within the region and outside come to start the business in the area. This further creates employment opportunities for the low-income individuals in the area and give them an opportunity to improve their incomes as well as living standards. This promotes economic development as it reduces the rate of unemployment in the region. According to Shaw and Hagemans (2015), gentrification has been associated with urbanization in many regions. As more high-income people come in, they invest in building modern houses in the area. During this construction, the low-income locals can get employment at the construction sites. This further promotes their living standards. 

Improved infrastructure 

Gentrification has been greatly associated with infrastructure development in the regions in which it occurs. Towns that have experienced gentrifications such as Boston have had rapid infrastructural developments which include roads, schools, hospitals, bridges, airports, railways and waste management ( Lees, Slater & Wyly, 2013 ). As the high-income individuals move to the neighborhoods, they move in with more income. This leads to the development of more roads in the area. Because the high-income individuals require good roads to use while driving, more roads will be constructed. This will lead to easy transportation in the region. Many low-income locals will be able to transport their products to the market cheaply. Better roads will attract more people into the region to come in and start a business. Good roads are essential for the business as it allows for easy and cheap transportation of good to the market. Construction of better roads will, therefore, benefit the low-income individuals in the area because it will make easy and available there mode of transport which will allow them to venture into more business activities and earn a living. 

Gentrification can also lead to the development of airports and railways system in the region. While the high-class people move to low-income regions, they invest in infrastructure and development of towns. As towns grow in the region, more people come in to trade and invest. As a result of an increase in trade, the government can see the need to construct airports and railways in such regions to boost trade. The presence of air and rail transport is used in job creation as well as enhancement of trade in the regions. People will be employed to work in the airports and railway stations thus earning them income. Air and rail transport will also make transportation more efficient and easy, attracting more traders including the international entrepreneurs. This will boost the economy of the region and the lives of the low-income families will change through increased income. 

As the wealthy class people come to an area, better schools are built to provide education for their children. This increases the accessibility of schools to the low-income locals who can easily take their children to the same schools that the children from the affluent families go. This increases the educational level of the whole region as everyone including impoverished families can have their children get a better education and increase their future income. Quality education is the basic foundation for the future success of a community and subsequently the whole region. If young generation receives quality education directed towards their career achievement, a productive nation is created into the future. This will develop the economy of the nation because of the skills and knowledge obtained from quality education. 

Some of the regions where low-income individuals stay lack electricity supply. However, as high-class people get into such regions, electricity is supplied to most parts of the region. Once electric power is brought in by the high-income individuals, the low-income families in the regions can access electricity at a reduced cost. As the region grows, more people gain access to power which they can use for lighting as well as for domestic use. This reduces the pressure on other forms of non-renewable energy that is used by people who don’t have access to electricity. Similarly, gentrification can lead to clean water supply in the region. The rich will have the income to bring in sufficient water supply in the region. This water will be accessible to both the low income and the high-income individuals. Having access to clean water is essential to the health condition of a population. When people drink and use clean water, they will be free from certain diseases that result from using untreated water. A healthy community is a productive community as they will have the power to actively take part in the development of the nation. 

According to Maughn (2015), gentrification leads to the development of hospitals in the region. As the rich come in, better hospitals both public and private are constructed within the area. This makes it more accessible for both the low income and the high-income families in the area to have access to quality healthcare services. As people get better health care services, their health outcomes improve making them able to take an active part in the economic development of the region. A healthy community is considered to be a productive community. As people get close to quality healthcare services, they will become more productive thus promoting economic development. Without good health care, many people will be unhealthy and thus unable to take part in the active development of the region. 

Another way by which gentrification promotes infrastructure development is through the development of telecommunication services such as internet and connectivity in the region. The high-class families introduce telecommunication services in the region by installing internet services and other connectivity services in the area. As more internet services are introduced in the region, people become connected and communication increases. The low-income families in the regions will also have accessibility to the internet and connectivity in the area thus increasing their access to information. As people become more connected, creativity increases and the region becomes innovative. Studies have shown that many impoverished families have improved their lives by having access to internet connectivity as a result of gentrification. Internet access promotes innovation and creates more business opportunities thus increasing the income of the impoverished families. It is argued that internet access will be important in the future generations’ success as the world goes global. Many businesses are going across the border due to internet access and technology. Creation of internet access to the neighboring regions is therefore important in promoting future economic development as the world goes digitalized. 

Deteriorated urban centers are known for poor waste management. Such areas experience much sewage overflow, poor dumping plan as well as poor drainage. When high-income individuals influx to renovate and develop the area, a new management of sewage and waste is introduced. The cleanliness of the town is increased through proper waste and sewage management. Because of their income levels, the affluent families will not want to stay in a dirty area. As a result, they will use their resources to ensure the town is clean and that wastes are well managed. Proper waste management will improve the hygiene and avoid the spread of certain diseases associated with a dirty environment. This will be beneficial to the low-income families who would then live in a clean environment free from infections. Sewer management has also been reported to improve in the areas where gentrification has taken place. Proper sewage control is essential I ensuring a clean and hygienic town that will be free from infections due to germs. Some cities were reported to contain a lot of sewage and litter dumped everywhere. But years after gentrification, these cities are very clean and well maintained. 

Increased Revenue to the Government 

When high-class families move into the neighborhoods, more businesses are opened up and the rate of revenue generation and income among both the low income and high-income individuals increases. This creates a more tax base for the state to get more revenue. As many people come in to do business in the area as a result of the infrastructural developments, the rate of revenue generation goes up ( Chaskin & Joseph, 2013 ). As more revenues are generated from businesses, more tax is also collected by the government. Taxation forms the major source of revenue for the government with which it relies on for economic development. The state uses revenue collection from the public for the provision of social amenities such as building hospitals, schools, roads and other economic developments. Gentrification is, therefore, a great contribution to the economic development because of the increase in the collectible tax available to the government. 

As the level of infrastructure increases due to gentrification, more foreign investors get attracted to invest in the area. As these people invest in the region, they bring in more income. The revenue they get from an investment is also a source of revenue to the government because foreign investors must pay tax to the state. Similarly, as the area develops due to gentrification, the value of the properties go up. People build houses and later sell them at a higher value than they constructed it. The extra revenue adds more income to the government in form of tax. Gentrification is, therefore, a major boost to the economy due to the revenue that it helps generate to the government. The more revenue the government gets in form of tax, the economic developments it undertakes. 

Crime Reduction 

The movement of affluent families to the new regions occupied by low-income families tend to improve the security of the area and reduce crime rates. Due to the creation of job opportunities to the many low-income residents, they will be able to earn a living. This will make them concentrate on a particular activity that generates revenue to them and thus shunning them from engaging in criminal activities. The rate of crime has been reported to be high in the low-income regions due to the high rates of unemployment witnessed in such areas making people embark on crime and other means to get a living. But with the new employment opportunities that are created as a result of gentrification, many youths from the low-income families will be absorbed into these jobs. This will create a region where the majority of the people are productive reducing the rate of idleness and joblessness which is the main cause of crime and robbery. Having a crime-free region or state is essential for the economic developments. Many people are attracted to a secure region for business. As crime rates reduce, more investors are attracted thus growing the economy of the region. 

Similarly, as high-class individuals move into the neighborhoods, they employ security guards to protect their homes and businesses. With security guards all over the place and proper lighting system, rates of insecurity will reduce significantly. As the high-class people settle in the low-income neighborhood regions and the constructions of the modern houses that are witnessed, more police officers are also deployed in such areas to protect the residents. This further reduces the rates of crime and robbery. As a result, many investors from outside will be attracted to the area because of the high-security levels, a situation which will lead to more job opportunities for the low-income residents. Very few investors would like to invest in areas with security threats, and as the level of security is enhanced due to gentrification, more investors come in thus a boost to the economy. 

Promotes Stability 

According to Smith and Williams (2013), gentrification prevents a continuous spiral of decline in the stability of the region and instead stabilize the area. As the affluent families come in, they construct their own modern houses in the area. This promotes stability by changing from renting to ownership. When people own houses, the funds that could have been used to pay rent can be used for other developments such as investment. The government promotes house ownership plan so that most people can live in their own houses and make savings for other investments. It, therefore, promotes stability by enhancing the power to save the funds that would have otherwise been used to pay housing rent. When more people own houses and can save, most people will have the capital to venture into entrepreneurship thus boosting the economic condition of the area. 

Over a given period of time, the low-income individuals also begin to gain stability due to gentrification. By utilizing the many available opportunities such as employment and business that come with gentrification, their income levels will rise. As they get stable and accumulate more income, they can also resort to buying or constructing own houses so that they stop paying rentals. After a long period of time since the beginning of gentrification in an area, most people including both the high class and low class will have owned houses and improve their power to save. This will lead to further development of the area and opening up of many other businesses because people will have excess cash to spend. As more businesses are started, the revenue for the government will also increase through taxation. This will mean the government will have more funds to spend on the economic development of the nation. 

Increase in the stability of people from a region due to gentrification is also important in reducing the number of people who are homeless. The government has been using resources to minimize the increasing number of homelessness that have been witnessed in certain regions ( Boterman & Gent, 2014 ). However, when people get stable and own their own houses, the burden on the government to provide housing for the homeless will be reduced. These resources will instead be channeled to other development programs which can be of benefits to the economy. When the impoverished families get stable due to employment opportunities created by gentrification, their living standards and that of their children improve. This helps in poverty elimination among certain generations. One of the key goals of governments is to eliminate poverty and by a decline in the poverty levels as a result of gentrification, there will be a stable economy where no one lives below a dollar a day. 

Urban development and Improvement 

The movement of high-class families to the new regions occupied by the low-income families has shown a rapid and significant growth of towns and cities in such areas. The high-class families come in with more income which they use to construct better modern houses in the area. At the same time, they also invest in certain businesses in these areas. Some of the businesses that have can be started include a hotel, bars, and retail shops. As these businesses grow, more people are attracted to the area either for business reasons or in search of employment opportunities. As more people come in, more commercial houses are constructed and more businesses opened. As these activities go on, the rate of infrastructure also increases with more roads being constructed to make easy the movement of people. Over time, people accumulate in this area and the demand for more houses arise. This leads to the development of towns. 

Researchers conducted a study on the economic patterns of the US top cities to identify the ones which experienced the most gentrification during their growth. In their report, they found that gentrification is often associated with the increase in the income levels as well as the prices of houses. As the prices of houses go up, more investors are attracted to build more houses so that they can get more income. As more houses are built, the process of urbanization is facilitated. Some of the major cities in the United States that experienced gentrification during their development include Boston, Seattle, and New York City. These three cities are the top three urban centers whose growth and development can be attributed to gentrification. Since their development into cities, more business activities have been witnessed in such cities which have led to better living standards for the residents. Also, the rate of infrastructure has rapidly grown in these towns since gentrification started in the previous years. All these have led to economic growth and development not only to the residents but also to the whole nation. For example, New York City forms one of the cities which contribute to the largest revenue generation to the government because of huge commercial activities that go on in the city. 

Urbanization is useful to the economic development because of the large business opportunities it provides for the citizens enabling them to improve their living standards. In fact, most urban centers form the core business pints for a nation as it involves the interaction and exchange between both the local and foreign business people. Reports show that having many urban centers with good infrastructure is the backbone to achieving economic growth and development. Many people would migrate to towns to start up their businesses or look for employment opportunities. Gentrification is hence useful to the economic development because it promotes urbanization which is useful in promoting businesses and improving the living standards of the people. 

Increased Value of properties 

Gentrification is associated with an increase in the prices of houses in areas where it occurs. As rich people come in and build new modern houses, the prices of the houses will go up in value. This makes many rich people build houses and sell them at a higher price making profits. The increasing value of the properties due to gentrification will benefit the house owners who can make huge profits from the business. The huge incomes made from the rise in the value of the properties can be used by the house owners to start businesses where both the low income and high-income individuals will benefit. Extra incomes from the sale of properties at a valued price act as capital for businesses. These businesses will be a source of employment opportunities for the low-income individuals. Therefore, the rise in the value of the properties due to gentrification does not only benefit the house owners who benefit from the sale, but also the low-class people who will get employment opportunities when the extra cash obtained is invested. 

Some scholars argue that gentrification will lead to high housing prices which will then lead to the movement of the low-income families to areas where they can fit ( Kleinhans & Kearns, 2013 ). However, other economists oppose the claim, saying that despite gentrification leading to the high housing prices, it may not necessarily lead to pushing of the low-class families of the region. In fact, they add that the low-income families will benefit from numerous job opportunities that are created. This they say will help boost the economic status of the impoverished families and help them rise. There is much evidence to show that increase in the property value will benefit the low-income individuals and therefore this outweighs the fact that the high housing prices will drive them out of the area. 

Reduced Poverty and Improved Living Standards 

As more people move into deteriorated urban areas, the quality of the lives of the current residents' increases. Research has shown that over thirty percent of the current low-income residents of the gentrified towns get new employment opportunities. Some even open up their businesses in such areas. With the influx of people, there is the availability of more market in which the residents can sell more of their products as asserted by Boterman and Gent (2014 ). At the same time, people get the opportunity to improve their living standards by engaging in trade with people from other regions. The high number of people ensures that all the houses are rented, no houses remains unrented. As a result, house owners get more income from the rentals which as a result also improve their living standards. According to certain economists, income is lost when some houses remain unrented. This denies many people income which could otherwise be used to do other economic activities. As more people come in, business increases and the flow of money from one person to another also increases. This promotes the economic development of the area and eliminates poverty levels. 

Saves time and money on travel 

According to the research conducted by a group of economists to identify the impacts of gentrification on an economy, they found that much time and money is saved by the residents on traveling. Because gentrification comes with new infrastructure developments such as roads and railway transports, the residents can easily access an effective means of moving from one region to another either to do business or go to a job. The accessibility of the means of traveling has led to time-saving as well as lower transport cost. This will leave the residents with more time to actively participate in productive economic growth and development. The resources saved on transport can also be used by the residents for other economic growth. Studies have shown that people living in slums which have poor road conditions spend a combined average of thousands of dollars on transport alone. This can be solved by creating efficient means of transport. 

Increased Accessibility to Quality Services 

While the affluent families move to the deteriorated urban neighborhoods to renovate and construct better houses, new quality services are made available to the residents ( Revington, 2015) . Due to the influx of affluent families, there will be the construction of high-quality hospitals in the region. Such hospitals will be accessible to both the affluent families and the impoverished families. The low-income families will be able to access quality healthcare which they could not access before the coming of the high-class individuals. As a result of better health care, there will be a healthy nation, which means a productive nation because one’s health determines the level of productivity. More quality schools will also be available in the region as a result of gentrification. The children of the affluent families go to better schools, and as a result, some better schools will be constructed in the neighborhood to offer quality education. The services of the security officers will also be increased in the region because of the increase in the population. As more people come in, more security is required to maintain the safety of all individuals. 

Despite the many positive effects of gentrification in the neighborhoods, many researchers focus much on its negative effects than the positive ones. While gentrification can undoubtedly improve the quality of the neighborhoods, it can lead to the relocation of the current low-income residents to other areas in search of cheaper housing. Gentrification is associated with high costs of houses which would be too expensive for the current low-income residents to afford to force them to move in search of low income. This according to psychologists could have a social effect on the lives of these people. Many social scientists have associated gentrification with community development where people are potentially forced to move out because they cannot afford the new cost of housing in the area ( Huynh & Maroko, 2014 ). 

Despite this negativity connected to gentrification, some studies have shown that gentrification may not after all lead to the relocation of the low-income individuals to other areas as argued by some scholars. Research conducted in a sample of gentrified cities have shown that low-income individuals still live in the gentrified areas, opposing the belief by many that it will lead to displacement of people ( Moos et al., 2015) . Even though the prices of the houses will rise, reports show that the high price will only lead to more income in the region, where extra money obtained will be invested and jobs will be created for the low-income individuals. While it could be important to note that gentrification could have some social impact on the lives of the current low-income residents, it is also worth noting that the positive benefits of gentrification overweigh the negative impacts. 

Conclusion 

Gentrification is important in promoting the development of the economy. It helps improve the living standards not only of the affluent families but also of the low-income families. Jobs creation, infrastructure development, accessibility to quality services, reduced crime rate and achieving economic stability are some of the positive benefits of gentrification. There are certain negative outcomes associated with gentrification. It is argued that it can lead to high housing prices in the area causing the current low-income residents to move out to areas where there are cheaper housing. This, according to social scientists could have negative social impacts on the lives of these people. However, despite these negative impacts, the contribution of gentrification to the economy remains very significant as compared to its limitations, making it therefore beneficial to the economy. 

References 

Boterman, W. R., & Gent, W. P. (2014). Housing liberalization and gentrification: The social effects of tenure conversions in Amsterdam.  Tijdschrift voor economische en sociale geografie ,  105 (2), 140-160. 

Chaskin, R. J., & Joseph, M. L. (2013). ‘Positive’Gentrification, Social Control and the ‘Right to the City’in Mixed ‐ Income Communities: Uses and Expectations of Space and Place.  International Journal of Urban and Regional Research ,  37 (2), 480-502. 

Ha, S. K. (2015). The endogenous dynamics of urban renewal and gentrification in Seoul.  Global gentrifications: uneven development and displacement. Policy Press, Bristol , 165-180. 

Huynh, M., & Maroko, A. R. (2014). Gentrification and preterm birth in New York City, 2008–2010.  Journal of Urban Health ,  91 (1), 211-220. 

Kleinhans, R., & Kearns, A. (2013). Neighbourhood restructuring and residential relocation: Towards a balanced perspective on relocation processes and outcomes.  Housing Studies ,  28 (2), 163-176. 

Lees, L., Slater, T., & Wyly, E. (2013).  Gentrification . Routledge. 

Maughn, N. Z. (2015). The Economic History of Urban Renewal and Gentrification in Harlem from the 1970s to the early 2000s. 

Moos, M., Revington, N., Wilkin, T., & Andrey, J. (2018). The knowledge economy city: Gentrification, studentification and youthification, and their connections to universities.  Urban Studies , 0042098017745235. 

Revington, N. (2015). Gentrification, Transit, and Land Use: Moving Beyond Neoclassical Theory.  Geography Compass ,  9 (3), 152-163. 

Shaw, K. S., & Hagemans, I. W. (2015). ‘Gentrification without Displacement’ and the Consequent Loss of Place: The Effects of Class Transition on Low ‐ income Residents of Secure Housing in Gentrifying Areas.  International Journal of Urban and Regional Research ,  39 (2), 323-341. 

Smith, N., & Williams, P. (Eds.). (2013).  Gentrification of the City . Routledge.