The Race to the Suburb : The Location of the Poor in a Metropolitan Area

We provide an explanation for the stylized fact that poor households are concentrated in the inner city of most U.S. metropolitan areas. We consider a metropolitan area with an inner city surrounded by a suburb and two income classes. Using numerical simulations, we show that two equilibria typically exist: one in which the inner city has a majority of poor households and the other in which it has a majority of rich households. We argue that the growth path selects the former equilibrium because rich households quot;jumpquot; to the suburb before poor households quot;spillquot; into the suburb. In addition, the model provides an explanation for gentrification: at large metropolitan populations, population growth causes rich households in the city to live in areas previously inhabited by poor households