The Fortunes of Poor Neighborhoods

We examine the longitudinal fortunes of the poorest fifth of U.S. metropolitan neighborhoods, defined as those with 20 percent or higher poverty rates in 1980. We employ logistic regression to identify the factors correlated with 1980-1990 increases and decreases in poverty rates across these poor neighborhoods, and examine whether factors vary by predominant racial/ethnic composition. Regional economic cycles and population growth performance are the dominant determinants of neighborhood poverty change, although the neighborhood’s initial poverty rate also influences it. Neighborhoods with higher poverty rates in 1980 evince less stability. Extremely poor neighborhoods are roughly as likely to experience an increase in poverty of five or more percentage points as a comparable decrease in poverty. Contrary to expectations, older housing, traditionally associated with neighborhood decline, predicts falling poverty. Rental housing is associated with a greater probability of rising poverty and a lower probability of falling poverty. However, many relationships are not consistent across neighborhoods of various racial/ethnic compositions. We conclude that continued poverty is not the only, or even most likely, fate of poor neighborhoods; their fortunes depend both on local and regional context.