Better housing, transport policies can prevent cities from becoming inequality traps, says the OECD

Better housing, transport policies can prevent cities from becoming inequality traps, says the OECD

Content supplied by the OECD

Governments should rethink urban housing, transport, schooling and jobs strategies to ensure that cities do not become inequality traps, according to a new OECD report which shows that a majority of cities have higher inequality than their respective national average.

Making Cities Work for All: Data and Actions for Inclusive Growth, produced as part of the OECD’s All on Board for Inclusive Growth initiative with the support of the Ford Foundation, finds that cities in 9 out of 10 countries studied had higher levels of household income inequality than their respective national average. Using the Gini coefficient that rates inequality on a scale of 0 to 1, 63% of the cities studied had higher readings than the country average.

Rapid growth in the world’s cities, driven in part by unprecedented migration from rural areas in developing and emerging economies, means that by 2050 around 70% of humanity will live in cities, up from around half today. The data suggests that as cities get larger, they tend to become more unequal and thus could become drivers of inequality on a national level.

“Cities are incredible generators of growth and wellbeing, yet poor planning can turn them into inequality traps,” said OECD Secretary-General Angel Gurría, launching the report at the World Summit of Local and Regional Leaders in Bogota. “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.” (read the full speech)

In advanced economies, cities have generated over 60% of jobs and economic growth in the past 15 years, and household incomes are on average 18% higher in cities than elsewhere. Yet not all cities have managed to grow inclusively, that is while engaging everyone in the process. Access to opportunities can stall for many low-income residents living in distressed neighbourhoods. The chances of success for children born into such areas are often tied to the socioeconomic status of their parents.

Looking at cities – defined as metropolitan areas with at least 500,000 inhabitants – in Austria, Belgium, Canada, Chile, Denmark, France, Italy, Norway, Sweden and the United States, Making Cities Work for All finds that in all countries with the exception of Canada the average inequality level is above the national average. Cities with the highest inequality in the countries studied include Bari (Italy), Brussels (Belgium), Calgary (Canada), Miami (United States) and Santiago (Chile).

When policies for urban housing and transport are poorly coordinated, they can increase segregation and restrict upward mobility for city dwellers. But smarter planning of public services can help lower-income households thrive in cities affected by sky-rocketing house prices. The report recommends that governments:

• Improve access to education with a particular focus on disadvantaged groups and increased investment in early childhood education. Establish vocational education and training programmes that match local needs.

• Invest in adult skills training and entrepreneurship, and encourage job creation in locally relevant industries.

•  Better target housing allowances to make access to housing fairer and promote mixed-income neighbourhoods. Reduce regulatory barriers to homebuilding.

• Co-ordinate investment for urban housing and transport, and ensure that national and local policies for urban development support, rather than contradict, each other.

• Provide easier access to public services such as healthcare and develop urban regeneration strategies across the board. 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Some time ago I saw a recording by an female American economist in which she tracked the amount of cash that a family could save from about the time of the second world war through to now. It started out that on a single income, a family could save something like 40% from memory, whereas now a two income family is barely keeping their head above water. One, (but not the only) reason given was that post war there was a huge movement of people from smaller communities into large metropolises. In the smaller towns people were far more self reliant and less dependent on expensive services. While fuel and cars have gotten less expensive we travel far greater distances in large cities. People have moved into a situation were they are now just cogs in a consumer driven environment. Education, housing and medical costs were other contributing factors. I note that having moved between large and small centres in NZ these costs also seem to rise with the population size also. If I could re find the link I would post it.
As the article says, average people are worse off in large cities, the examples are numerous, the latest being Hong Kong where people are fed up with being screwed and 40% are considering leaving.
If people are worse off in the large cities, this suggests that they are not as efficient or producing enough wealth to fund the higher cost that it takes to run them. They seem to soak up more and more of the nations resources and in the case of Auckland seem to need endless extra funding just to keep them going. In Brexit we saw a sharp divide between big city London and the rest of the country. This could be in part interpreted as dissatisfaction with the way that the country is run, being so focused on London. Similarly the idiot Trump appears to have a lot of support from the smaller forgotten communities.
If large cities do not work for average people, we need to find ways to discourage their development in favour of a more distributed population. After all we evolved as smaller communities not as a mass aggregation like ants.

There is also too, the need to rebuild after war, and even the States which did not have damage such as Europe sustained, they still had a fair cull of their young men, and birth rates probably dropped while the war was on. War has been our go to since forever when growth as we know it reaches a peak and we need to get it going again. The whole human race is fairly nuts, really, when you consider if we really got our thinking caps on, we could solve that little one.

In most respects the large city is an experiment but with real people and on a monumental scale.
Check out this video from the Pentagon. Hat tip MikeB


THE YEAR IS 2030. Forget about the flying cars, robot maids, and moving sidewalks we were promised. They’re not happening. But that doesn’t mean the future is a total unknown.
According to a startling Pentagon video obtained by The Intercept, the future of global cities will be an amalgam of the settings of “Escape from New York” and “Robocop” — with dashes of the “Warriors” and “Divergent” thrown in. It will be a world of Robert Kaplan-esque urban hellscapes — brutal and anarchic supercities filled with gangs of youth-gone-wild, a restive underclass, criminal syndicates, and bands of malicious hackers.