Cities at risk of becoming ‘inequality traps’, review finds

14 Oct 16

Governments across the world have been urged to consider new ways to provide public services, housing and transport in cities following a review that found they have higher rates of inequality than the countries to which they belong.

A study by the Organisation for Economic Co-operation and Development (OECD) found that cities in all but one of 10 countries studied had higher levels of household income inequality than their respective national averages.

The Making Cities Work for All: Data and Actions for Inclusive Growth highlighted that rapid growth, driven in part by unprecedented migration from rural areas in developing and emerging economies, meant that by 2050 some 70% of the world’s population would live in cities, compared with around half today.

The OECD said its data suggested that, as cities became larger, they tended to become more unequal and could therefore became drivers of inequality. There was therefore a need to think afresh about urban housing, transport, schools and job strategies.

OECD secretary general Ángel Gurría said: “Cities are incredible generators of growth and wellbeing, yet poor planning can turn them into inequality traps.

“If we want to curb the global trend of rising inequality, we must focus our efforts on cities and ensure that they work to the benefit of all.”

In advanced economies, cities generated more than 60% of jobs and economic growth in the past 15 years, but access to opportunities could be limited for many low-income residents in distressed neighbourhoods.

Governments could try to tackle these problems through improved access to education – in particular for disadvantaged groups – investment in adult skills training and entrepreneurship, promotion of mixed-income neighbourhoods and easier access to public services.

Coordinated investment for urban housing and transport was needed so long as “national and local policies for urban development support rather than contradict each other”, the report said.

It examined metropolitan areas with at least 500,000 inhabitants in Austria, Belgium, Canada, Chile, Denmark, France, Italy, Norway, Sweden and the US.

Except in Canada, the average inequality level of these cities was above the national average.

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