Reflections on Inequality and large cities

Interesting article on megacities and inequality entitled “Do cities widen the gap between rich and poor?” By Kristian Behrens and Frédéric Robert-Nicoud in World Economic Forum 

Yet one pattern has gone largely unnoticed: inequality is especially strong in large cities. At least one-quarter of the increase in earnings inequality in the US during 1979-2007 is explained by the high growth of earnings inequality in large urban areas (Baum-Snow and Pavan 2013).

According to this research “Large cities are more unequal than the nations that host them

In it, several magnific research questions aroused:

Are big cities merely the locus where income inequality is starkest, or are they host to economic mechanisms that explain (at least partly) that inequality?

How can we then explain the size-inequality nexus? Two main explanations are posed by the authors.

One seems to attribute the variations to the different industrial structure:

First, large cities may differ systematically in their industrial structure and the functions they perform. Large cities host, for example, more business services and the higher-order functions of finance and research and development (R&D), whereas small and medium-size cities host larger shares of lower-order services and manufacturing.

Another to the better access to public transportation:

large cities attract a disproportionate fraction of households at the bottom and at the top of the income distribution (Eeckhout et al 2014). Central cities of US MSAs attract, for example, poor households because they offer better access to public transportation (Glaeser et al. 2008)…

…Actually, Harvard economist Edward Glaeser claims that the large poverty rates of central cities are a testimony of their success, not their failure: they attract poor households by catering better to their needs (Glaeser 2011)

And this is the authors’ theory on this phenomena. They attribute inequality to both greater incentives and risk of failure:

…larger cities provide incentives for the most able to self-select into activities that offer high payoffs to the successful. However, the risk of failure associated with those activities also increases because workers in larger cities compete against more and better rivals.

Disproportionate rewards for the most skilled – and failure for the less skilled – then drives income inequality.

All reasons are truly insightful. However, I’d like to remark two things. First, more attention should be paid to the origin of new-residents. Are such issues as land use conflicts, forced displacement beneath this phenomena? See bellow map.

Secondly, none of them seems to pay special attention to the symbolic and dramaturgical nature of many of the human behaviours (Erving Goffman would agree). To what extent is material success the reason to emigrate to large cities? The place we live is probably the most determinant factor of our individual identity. The prestige of living in a large cities for many rural-side newcomers could be an important factor and that, perhaps, the higher inequality (and all problems around it) is seen as the price to be paid. Furthermore, the opportunities in terms of individual emancipation may be seen as the real incentive beyond economic factors. Specifically, the fact of being seen as urban citizen from the original rural community members could be the emigration underlying reason. One may prefer live anonymously and walking free in the city than keep belonging to rural communities or Gemeinschaft in terms of Ferdinand Tönnies. This is especially important in developing countries. We shouldn’t forget that most of them are eminently rural countries getting rapidly urbanized.

In two word, (and as said in previous posts) we can’t understand such processes as rapid urbanization from an exclusive “economicist” point of view. Those processes “ involve social control”, as Piketty has recently suggested.

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