Abstract
Why do high income residents tend to live in the suburbs in some cities, and in the central areas inothers? What drives changes over time such as gentrification? Main answers to these questions in the literature focus on neighborhood-level characteristics. We explore a model of location by income derived from the monocentric model of Alonso-Mills-Muth, where we consider land as a necessity good. Under thisspecification, the relative location of low- and high-income depends on aggregate city population, income distribution, and land availability. Our model predicts that low-income households occupy the center of cities with small population and/or unconstrained land. In large and/or constrained cities, low-income households occupy the inner suburbs, while high-income ones live in the cen-ter and the outer periphery. Such a trend appears consistent with observations on US cities.