Creative Class

U.S. cities are now as unequal as those in Africa, according to a new UN report (via Planetizen).

Major U.S. cities including New York, Washington, Atlanta and New Orleans have levels of economic inequality that rival cities in Africa … The most balanced city in the world is Beijing, with the most egalitarian cities on average to be found in western Europe … “The authors (of the study) find that though the cities in the United States of America have relatively lower levels of poverty than many other cities in the developed world, their levels of income inequality are quite high,” the report said.

Another new study on inequality in U.S. urban areas by Ed Glaeser and colleagues (via Mark Thoma) sheds light on this, finding that urban inequality which was previously reflected poverty concentration now reflects the increasing concentration of wealthier, higher-skilled populations in certain urban areas.

What determines the degree of inequality across metropolitan areas? Twenty years ago, metropolitan inequality was strongly associated with poverty, but today, inequality is more strongly linked to the presence of the wealthy. Inequality in skills can explain about one third of the variation in income inequality, and that skill inequality is itself explained by historical schooling patterns and immigration. There are also substantial differences in the returns to skill, related to local concentrations in different industries, and these too are strongly correlated with inequality.

This jibes with our analysis in Flight of the Creative Class which found that highly innovative and creative regions were among the most unequal.

America’s economic geography is becoming spikier and more unequal both within as well as between regions.

Writing in the New York Sun, Harvard’s Ed Glaeser reviews Harm de Blij’s new book,“The Power of Place (h/t: Mark Thoma):

But the flat world experienced by the globe-trotting management consultant is only the wealthiest and most air-conditioned sliver of the globe … Place is powerful indeed. People born in America or Europe are much more likely to end up wealthy and healthy than people born in the developing world. Life expectancy in Sweden and Japan is over 80, while life expectancy in Zimbabwe is under 45. The success of New York reflects the power of place to foment creativity and productivity by speeding the flow of ideas.

In his book, Mr. de Blij addresses some of the most fundamental questions in geography: Are differences across space man-made or nature’s handiwork? Is globalization homogenizing the world, and is that a good thing? Should political power be held by large nation states or devolved to smaller geographic units?

Ryan Avent, drawing on the research of Ed Glaeser and his collaborators, suggests that higher energy and transportation costs may spur a great “unflattening.”

In recent decades, global trade patterns–that is the structure of
supply chains and mix of products shipped–have developed in a world of
more or less persistent declines in transportation costs (and, one
presumes, the expectation that those declines would continue). In the
same way, our domestic urban geography has evolved with certain
expectations about transportation cost trends in mind.

Some non-trivial portion of those transportation cost declines,
actual and expected, are likely not sustainable over the long-term.
Depending on just how off expectations were, we could see some
interesting changes in economic patterns. For one, I’d expect a global
squishing of supply chains and cities. For another, I’d expect the mix
of shipped goods to move toward high value items, which have a lower
ratio of shipping costs to sale price. That may mean a return of some
production jobs to service-oriented economies.

He’s got a very good point.