A lot of cities try to promote creative activity as a tool for economic growth. A lot of creatives — and activists — worry that arts districts and the like are simply the first step to gentrification, pushing out the original artists as well as local residents. Who’s right?
In a new Creative PEC working paper, Tasos, Diana and I try to figure this out. We build a panel of ~80,000 neighbourhoods in England and Wales, and look at the links from clustering of creative workers, and firms, on gentrification over the following decade. (We define gentrification as the combination of rising property prices and a rising share of graduates in a neighbourhood.)
The topline is that we find a positive link — but it’s *extremely* small in the average neighbourhood (which doesn’t have much creative activity) — and crucially, not much bigger in places with a lot of creative activity.
To give a sense of the magnitudes, in our current estimates, the increase likelihood of gentrification from an improvement in local KS2 school test results is eight times bigger than the same increase in the local share of creative firms. Now, the creative industries ‘effect’ also gets bigger in London and other big cities, not surprisingly — but is still dwarfed by other factors. We also do a stack of other tests in the paper breaking down the linkage across different places, property types and firms/workers, as well as looking into the dynamics of artists, creative workers and neighbourhood change.