Second-hand gentrification: theory and evidence from high-speed rail extensions

Does gentrification spread along intercity transport connections? We consider a model with heterogeneous individuals populating a primary and a secondary city. By reducing intercity commuting costs, transport connections induce mi- gration of skilled individuals towards the secondary city, which increases housing prices. We call this effect second-hand gentrification. We confirm these predictions using the 2017 expansion of the French HSR network from Paris to Bordeaux and Rennes. We find that the HSR connection induced skilled Parisians to move to Bordeaux and Rennes. Housing prices there consequently increased (+10.6%), as well as the median income (+2.5%), and within-neighborhood income inequality (+2%).