The global financial crisis and neighborhood decline

Merle Zwiers,Gideon Bolt,Maarten Van Ham,Ronald Van Kempen

doi:10.1080/02723638.2015.1101251

Abstract

ABSTRACTNeighborhood decline is a complex and multidimensional process. National and regional variations in economic and political structures (including varieties in national welfare state arrangements), combined with differences in neighborhood history, development, and population composition, make it impossible to identify an ideal-type process of neighborhood decline over time. The recent global financial crisis and the subsequent economic recession affected many European and North American cities in terms of growing unemployment levels and rising poverty in concentrated areas. Investments in urban restructuring and neighborhood improvement programs have simultaneously decreased or come to a halt altogether. While many studies have investigated the effects of the financial crisis on national housing markets or on foreclosures in particular US metropolitan areas, only a few studies have focused on how the crisis affected neighborhood change. By proposing 10 hypotheses about the ways in which the economic crisis might influence processes of neighborhood decline, this article aims to advance the debate and calls for more contextualized, empirical research on neighborhood change.

Highlights

The global financial crisis, which started in 2008, has had a major impact on many Western European and North American countries
We have argued that contemporary neighborhood decline is a multidimensional process fueled by several macroeconomic processes related to the financial crisis and the recession that followed
We have argued that there are several local and internal factors that might function as a mediating factor in processes of neighborhood decline

Summary

Introduction

The global financial crisis, which started in 2008, has had a major impact on many Western European and North American countries. In other countries where the option of foreclosure is often not available, households that are unable to pay their rent or mortgage often have to move to cheaper dwellings and less attractive neighborhoods, while others have to stay put, because moving is too expensive or alternatives are not available, or because negative equity makes it impossible for them to move All of these developments have contributed to rising inequality in the Global North, in terms of income and housing (for analyses of income inequality, see Bellmann & Gerner, 2011; Immervoll, Peichl, & Tatsiramos, 2011). We highlight important elements from existing studies to formulate 10 hypotheses about the effects of the financial crisis and of the economic recession on neighborhood decline These hypotheses are divided over three sections, each with a different geographical focus. The part zooms in on the local context as a mediating variable in processes of neighborhood decline, while the final part concentrates on residents as drivers of neighborhood change

Part 1: The role of national housing and welfare systems

Part 2: The mediating role of the local context

Part 3: Behavioral responses: exit and voice

Findings

Conclusions