How does gentrification affect minority-owned businesses?

This research investigates the quantitative impacts gentrification has on minority-owned businesses. Gentrification is a general term for the process by which wealthier residents move into urban, typically low-income neighborhoods, subsequently increasing costs and displacing existing residents. Gentrification is believed to have profound demographic, social, and economic effects. This paper focuses on the economic effects of gentrification, specifically its impact on minority-owned businesses. This analysis is conducted by using econometric estimation techniques called Ordinary Least Squares (OLS) and Two Stage Least Squares (2SLS). Using data from the fifty largest cities from the United States Census’ Survey of Business Owners (SBO) and the American Community Survey (ACS), simple regression OLS and 2SLS models were developed to assess the relationship between the number of minority-owned businesses and median income, which served as a proxy for gentrification. The OLS regression analysis revealed significant result for all groups except for nonblack minority-owned businesses. 2SLS regression analysis showed significant results that black-owned businesses were negatively correlated with median income, with a coefficient of -0.647, meaning that as median income increases by one dollar, the number of minority-owned-businesses decreases by 0.647.