Neighborhood Economic Change in an Era of Metropolitan Divergence

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This study foregrounds the metropolitan area as a key driver of contemporary neighborhood economic change. The recent “Great Divergence” in metros’ economic, social, and political conditions suggests metros increasingly stratify neighborhood trajectories. Yet, many studies only consider neighborhood-level predictors of change or implicate metro-level factors more applicable to the twentieth century (e.g., manufacturing exposure) than the twenty-first. To clarify the metro's contemporary role, this study synthesizes multiple literatures, deriving novel hypotheses that link metropolitan skill agglomeration and income segregation to neighborhood economic change, and then tests them using multilevel models and data drawn from multiple sources, including the census, Opportunity Insights, and National Transit Database. Analyses, based on all neighborhoods within 325 metros between 2000 and the mid-2010s, suggest over 10% of the variance in neighborhood median income change resides between, rather than within, metros. As predicted, metro skill agglomeration dynamics appear to boost neighborhoods’ median incomes, and metro income segregation depresses them. Results remain intact after accounting for state fixed effects and controls for five plausible alternative explanations of metro effects. Overall, the study provides a theoretical and empirical foundation for future neighborhood change research highlighting the metro in general, and two higher order spatial processes—income segregation and skill agglomeration—in particular.