How are finance jobs widening income inequality globally?
Marta M Elvira of the University of Navarra, Nils Neumann of the University of Michigan and Olivier Godechot of Sciences Po discuss the impact of a city’s financial market on the wider landscape.
A new study reveals that the presence of a financial market in a city contributes significantly to income inequality globally. Researchers from the University of Navarra, the University of Michigan, and Sciences Po compared the top earners in cities within 10 countries spanning Europe, North America, and Asia over a 20-year period.
The findings indicate that financial hubs consistently accounted for a substantial share of the income growth among the top 1 percent earners, with some cities experiencing earnings concentrations more than double those of comparable cities without financial sectors. The surge in earnings within the financial sector is estimated to account for 30 percent of the disparity between financial and comparison cities.
Even during periods of economic downturns, salaries in the financial sector remained high, suggesting a strong influence of the finance industry on income inequality levels. This research highlights the importance of understanding the role of financial cities in the global landscape and the implications for the types of cities and societies we wish to create.
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