“Ci­ties should en­sure that em­ploy­ment and en­trepreneur­ship op­por­tu­ni­ties are avail­able to all peo­ple, in­clud­ing women, young adults, im­mi­grants, and dis­ad­van­taged pop­u­la­tions”

Financial Mirror (Cyprus) - - FRONT PAGE -

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 favour 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.

As pol­i­cy­mak­ers and po­lit­i­cal lead­ers look for ways to make eco­nomic growth more in­clu­sive, ci­ties will play a cen­tral role in any so­lu­tion.

A sur­vey of OECD coun­tries shows that half the to­tal pop­u­la­tion lives in ci­ties of more than 500,000 in­hab­i­tants, and that ci­ties have ac­counted for 60% of to­tal growth of em­ploy­ment and GDP since 2001.

How­ever, this growth has not been in­clu­sive: in­come in­equal­ity in ci­ties is higher than the na­tional av­er­age in all OECD coun­tries sur­veyed, ex­cept Canada. In the United States, 95 of the 100 largest metropoli­tan ar­eas added jobs and in­creased their eco­nomic out­put in the five years fol­low­ing the Great Re­ces­sion, but only 20 ex­pe­ri­enced me­dian-wage growth.

Eco­nomic gains in re­cent years have not made the typ­i­cal worker bet­ter off, and as wealthy in­di­vid­u­als have reaped the ben­e­fits of growth, poverty has be­come more con­cen­trated. Ac­cord­ing to re­search by the Brook­ings In­sti­tu­tion, the num­ber of ex­tremely poor neigh­bour­hoods in the US has more than dou­bled since 2000.

This has far-reach­ing costs. Grow­ing up in a poor neigh­bour­hood has been shown to re­duce a per­son’s life prospects dra­mat­i­cally, even when earn­ings re­main con­stant. cru­cial role may­ors play in cre­at­ing eco­nomic op­por­tu­nity and boost­ing the pro­duc­tive ca­pac­ity of in­di­vid­u­als and firms.

At a re­cent Brook­ings event, OECD Sec­re­tary-Gen­eral Angel Gur­ría dis­cussed four key ar­eas where ci­ties can work to re­duce in­equal­ity. These ideas will be de­vel­oped fur­ther at a meet­ing in Paris on Novem­ber 21, hosted by Paris Mayor Anne Hi­dalgo.

First, ci­ties should make ed­u­ca­tion sys­tems more in­clu­sive by in­vest­ing in vo­ca­tional schools where peo­ple of

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