The Rising Value of Time and the Origin of Urban Gentrification

In the past decades, gentrification has transformed American central city neighborhoods. In this paper, I estimate a spatial equilibrium model to show that the rising value of high-skilled workers' time contributes to the gentrification of American central cities. I show that the increasing value of time raises the cost of commuting and exogenously increases the demand for central locations by high-skilled workers. While change in value of time has a modest direct effect on gentrification of the central cities, the effect is substantially magnified by endogenous amenity improvement driven by the changes in local skill mix