Gentrification in major cities has led to concerns that poor and nonwhite residents are being displaced. This paper uses administrative data on tax filing households in Washington DC to examine the potential role that increases in the Earned Income Tax Credit (EITC) plays in the location choices of the working poor. Its principal findings suggest small effects of the EITC on move decisions. Married households with dependents who received increased EITC payments are slightly more likely to remain in gentrifying neighborhoods. By contrast, single parent filers receiving EITC payments are more likely to exit these neighborhoods.

We study neighborhood choice using a novel research design that contrasts the move rate of homeowners who receive a new different-race neighbor immediately next-door versus slightly farther away on the same block. This approach isolates a component of preferences directly attributable to neighbors’ identities. Both Black and White homeowners are more likely to move after receiving a new different-race neighbor. Findings are robust to additional controls (e.g., income) and alternative research designs. We find evidence of heterogeneity in responses, especially associated with housing density, which has implications for understanding contemporary neighborhood racial change and prospects for maintaining stable, integrated neighborhoods. (JEL D91, J15, R23, R31)