Business Churning and Neighborhood Instability: Is There a Link?

Abstract

Much of the work concerning economic dynamism has focused on its aggregate-level implications, while there have been rising concerns about business displacement at the community or neighborhood level. In this article, we analyze this important (restructuring) process using detailed establishment-level business information and explore how it manifests itself across space within the Los Angeles—Long Beach—Santa Ana, CA Urbanized Area. We also investigate the association between business churning and neighborhood-level housing vacancy rates to understand the implications of dramatic changes in the business landscape. We find that housing vacancies are more likely to increase in urban neighborhoods with a higher establishment death rate, while the creation of new businesses can mitigate the association to some extent. We also detect substantial variation across decades not only in the spatial distribution of business churning but also in its association with housing vacancy rates, suggesting the evolving nature of business dynamics and their implications.