The Geography of Racialized Commerce and Gentrification

How are local businesses distributed across neighborhoods by race and class? How do they change as neighborhoods gentrify? This paper demonstrates the significance of considering organizational heterogeneity and racial dynamics, pushing beyond the market-based approaches that primarily consider socioeconomic differences to explain disparities in organizational resources across neighborhoods. Drawing on the Reference USA’s local business data harmonized with the Census and American Community Survey data in 10 different US cities spanning from 2000 to 2010, I conducted city-fixed effects negative binomial regression models to answer these questions. My findings show that while essential businesses are relatively evenly distributed across neighborhoods with varying ethnoracial compositions, discretionary businesses are disproportionately concentrated in white neighborhoods, net of their socioeconomic status. By contrast, discretionary businesses are consistently underrepresented in black neighborhoods, even when they are socioeconomically well-off. Furthermore, socioeconomic upgrading of the neighborhood is associated with an increase in discretionary businesses, particularly when gentrification accompanies white influx. Gentrification without white influx did not bring about significant growth in discretionary businesses, suggesting that discretionary businesses not only symbolize middle-class markers but also are racialized as white. These findings unveil the distinct relationship between whiteness and discretionary businesses, calling for scholarly attention to unpack the racialized institutional sorting of businesses and how such a process is tied into the construction and maintenance of neighborhood hierarchies. The paper discusses the potential supply- and demand-side mechanisms driving these patterns and suggests avenues for future research.