City Growth and Income Inequality

Abstract

The world is urbanizing at a rapid pace and urban issues, specifically those related to inequality and poverty, have gained attention in recent years. This research aims to study the relationship between income inequality and a set of urbanization proxies: city population growth, population density growth, and urban growth. Using data on metropolitan areas from the OECD and based on previous literature, a model was designed, using the urban growth variables mentioned and control variables commonly used, such as educational attainment, share of manufacturing jobs, and income per capita. The OLS regression method showed that population and population density growth in cities is positively associated with income inequality, measured by Gini coefficient. The effect of urban area growth doesn’t seem to be important in terms of magnitude, but population density growth seems to be significant. The results from this research can provide useful information and can lead to a discussion about urban and development policy issues around the world.