February 16, 2018

City Living Is Back, and Immigrants Can Help Struggling Cities Get in on the Action

Adam Millsap

Senior Affiliated Scholar

As recently as thirty years ago, cities were perceived as dirty, scary places by many people: Crime was high, affluent people and jobs were moving to the suburbs, and there was talk that cities were on their last leg. But it turns out that cities are more resilient than many people thought, and new research finds that many of them are experiencing an urban revival driven by young people with college degrees.

One of my favorite movies as a kid was 1990’s Teenage Mutant Ninja Turtles. It took place in a grimy-looking New York City where crime was rampant and police were powerless to stop it. A year earlier, Tim Burton’s Batman was set in a similar-looking Gotham City, the comic-book version of New York. Needless to say, New York City was not on the short-list of places many people my age wanted to visit when they grew up.

But that started to change in the mid-to-late ‘90s. Shows like Friends, Sex and the City, and even Seinfeld took place in a safer, hipper New York. And these changes weren’t just on TV. New York and other cities were actually getting safer.

They were also transitioning from places of production to places of consumption. The loss of manufacturing jobs nationwide throughout the 1970s and ‘80s eroded the employment base of several large cities, particularly in the Midwest and Northeast where many of the jobs were located. The result was empty warehouses and factories in downtown neighborhoods that needed to be redeveloped.

In the early 2000s, many cities began redeveloping their downtowns to take advantage of their greatest asset—density. Waterfront factories and warehouses in places like Cleveland and Pittsburgh were turned into condos and mixed-used buildings with apartments and retail.

These neighborhoods are largely walkable due to the historical density of buildings, and downtowns in many cities have become cool places to live or visit for a night out with friends.

The urban revival narrative has been the subject of books and articles for years, but recent research from economists Victor Couture and Jessie Handbury provides additional evidence beyond the narratives. From 2000 to 2010, they find that the population growth of college-educated 25 to 34 year olds was largest in areas closest to downtown in the 50 biggest cities. They document a similar pattern for 35 to 44 year olds with a college degree.

They also examine the causes of the recent urban revival and conclude that it’s largely driven by a desire to be near a variety of location-specific consumption amenities like restaurants, bars, gyms, and other personal services. In my own research, I also find that young, college-educated millennials are more likely to live in high-amenity cities like New York, Chicago, and Portland than similar-aged baby boomers.

The authors note that the drop in crime during the 1990s is also factor, but it plays a smaller role than amenities. Additionally, they find little evidence that higher school quality or robust public transit—two things that many people believe cities need—make much of a difference.

Restaurants and bars have been widespread in downtowns for decades, so why do they seem to be having such a big effect on where young, college-educated people live today? The authors aren’t entirely sure, but they suggest that changing family patterns has something to do with it.

Young people are staying single and childless longer today, and downtowns provide a lot of places for single people to mingle with one another. No kids also means that young people have more money to spend on drinks and meals with friends, and dense, walkable, downtown neighborhoods make it easier to enjoy a night out. The lack of children also helps explain why school quality doesn’t seem to matter much.

So how do immigrants fit in? Easy: They help provide the variety of consumption options that young, educated people want. Cities with thriving downtowns like San Francisco, New York, and Boston have relatively large immigrant communities, and those immigrants operate a host of different restaurants, shops, bars, and other unique businesses. Cities without a diverse population will also lack a diverse downtown, and that puts them at a disadvantage.

Cities can also help themselves by making it easier for people to start businesses. Implementing a policy of permissionless innovation, which is the notion that new technologies and business models should be permitted by default, is a good step in that direction.

The urban revival is real, and cities that foster a safe, walkable downtown filled with a variety of places for people to socialize have the best chance of success.