Global cities’ contribution to inequality is more driven by financialization than globalization, new study finds

Global cities contribute to income inequality by concentrating high-paying jobs. But how much and why?

Is it because they are major metropolises, political decision-making centers, places of global coordination of production and trade of non- financial goods and services? Or is it because they are financial centers?

Using data from 10 advanced capitalist democracies, this paper finds that:

• Global cities play a significant role in the increase of income inequality at both national and regional levels.
• The contribution to income inequality is more pronounced in financial cities compared to non-financial cities with similar characteristics.
• As countries become more financially focused, the pay gap between financial cities and comparable non-financial cities widens.
• The primary driver of global cities’ contribution to income inequality is the concentration of financiers in these cities rather than other global economic coordination functions.

AUTHORS

• Olivier Godechot, Sciences Po, CRIS-CNRS and AxPo, France
• Nils Neumann, University of Michigan, USA
• Lasse Henriksen, Copenhagen Business School, Denmark
• Are Skeie Hermansen, University of Oslo, Norway
• Feng Houd, Statistics Canada, Canada
• Naomi Kodama, Meiji Gakuin University, Japan
• Zoltan Lippenyi, University of Groningen, the Netherlands
• Silvia Maja Melzer, Universitat de Barcelona, Spain
• Halil Sabanci, Frankfurt School of Finance and Management, Germany
• Max Thaning, Stockholm University, Sweden
• Paula Apascaritei, Universidad Carlos III de Madrid, Spain
• Dustin Avent Holt, Augusta University, USA
• Nina Bandelj, University of California-Irvine, USA
• Istvan Boza, Institute of Economics, Centre for Economic and Regional Studies, Hungary
• Marta M. Elvira, IESE Business School, University of Navarra, Spain
• Gergely Hajdu, Vienna University of Economics and Business, Austria
• Alena Křižkova, Institute of Sociology, Czech Academy of Sciences, Czechia
• Andrew Penner, University of California-Irvine, USA
• Andreja Poje, Association of Free Trade Unions of Slovenia, Slovenia
• William Rainey, University of Massachusetts-Amherst, USA
• Mirna Safi, Sciences Po, CRIS-CNRS, France
• Matthew Soener, University of Illinois at Urbana-Champaign, USA
• Donald Tomaskovic-Devey, University of Massachusetts-Amherst, USA

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