Inclusive Growth Depends on Cities
The gains from economic growth are increasingly going to the very highest earners, and nowhere is this more true than in cities – the site of both opportunity and disparity. To reduce inequality, we should look to mayors from around the world who have devised local solutions that can be applied elsewhere.
PARIS, WASHINGTON, DC – We live in turbulent times, and popular discontent with the status quo is mounting. The reasons for popular frustration vary from country to country, but the common thread everywhere is a growing sense that the economy is rigged in favor of the few.
Indeed, the gains from economic growth are increasingly going to the very highest earners. In OECD countries, people in the top 10% of the income distribution earn around ten times more than people in the bottom 10% – up from seven times more nearly 30 years ago. In 2012, among the 18 OECD countries with comparable data, the top 10% accounted for 50% of total household wealth, while the bottom 40% accounted for only 3%.
We all pay a price when inequality reaches new heights. In a range of OECD countries, rising inequality knocked 6-10 percentage points off overall GDP between 1990 and 2010. When the poorest people are unable to fulfill their potential, economic growth suffers.