Neighbourhood Change and Aging-in-Place

Abstract

While much of the focus on neighbourhood change has been on household sorting and endogenous amenities, little attention has been paid to another factor driving neighbourhood change - aging-in-place. While many households sort into neighbourhoods based on preferences at a given point in their lives, many households continue to live in the same place for many years. Although neighbourhood change will be minimal if the age distribution remains consistent over time, there are reasons to believe the distribution will change. In this paper, I first provide estimates of the change in the age distribution across neighbourhoods over time. Then, establishing that there are important dynamics in terms of the age distribution, I build a model that seeks to quantify the key factors that drive changes to the age distribution and the effects these changes have on welfare across ages and income levels. This mechanism of neighbourhood change has important implications for policy because public investments in infrastructure and schools are often tailored to a neighbourhood’s character at a given point in time. However, if people live in the same neighbourhood over their entire life cycle, these investments may be poorly directed.