Financial markets drive rising income inequality in global cities

Research conducted by scholars from the University of Navarra, the University of Michigan, and Sciences Po indicates that the presence of major financial markets is a significant driver of income inequality in global cities. By analyzing two decades of employer-employee data across 10 countries in Europe, North America, and Asia, researchers found that the earnings share of the top 1% increased by an average of 0.17% per year.

The study compared primary financial hubs to comparable secondary cities, such as New York versus Los Angeles, Madrid versus Barcelona, Tokyo versus Osaka, Paris versus Lyon, and Amsterdam versus Rotterdam. The findings show that the highest earners in each country are more heavily concentrated in financial hubs than in comparison cities.

While the trend of rising inequality is global, the impact varies by nation. The United States recorded the largest increases in the earnings share of the top 1%, while countries like Denmark and Sweden experienced the smallest rises.