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Financialization more than globalization! The contribution of global cities to inequalities

Author

Listed:
  • Olivier Godechot

    (Institut d'Études Politiques [IEP] - Paris, CRIS - Centre de recherche sur les inégalités sociales (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, AxPo - AxPo Observatory of Market Society Polarization - Sciences Po - Sciences Po)

  • Nils Neumann

    (University of Michigan)

  • Lasse Henriksen

    (Copenhaguen Business School)

  • Skeie Hermansen

    (UiO - University of Oslo)

  • Feng Hou

    (Statistics Canada)

  • Naomi Kodama

    (Meiji Gakuin University)

  • Zoltán Lippényi

    (University of Groningen [Groningen])

  • Silvia Maja Melzer

    (UB - Universitat de Barcelona)

  • Halil Sabanci

    (Frankfurt School of Finance and Management)

  • Max Thaning

    (Stockholm University)

  • Paula Apascaritei

    (UC3M - Universidad Carlos III de Madrid [Madrid])

  • Dustin Avent Holt

    (Augusta University - USG - University System of Georgia)

  • Nina Bandelj

    (UC Irvine - University of California [Irvine] - UC - University of California)

  • István Boza

    (Research Centre for Economic and Regional Studies - MTA - Hungarian Academy of Sciences)

  • Marta M Elvira

    (IESE Business School)

  • Gergely Hajdu

    (Vienna University of Economics and Business - WU - Wirtschaftsuniversität Wien [Austria])

  • Alena Křižkova

    (CAS - Czech Academy of Sciences [Prague])

  • Andrew Penner

    (UC Irvine - University of California [Irvine] - UC - University of California)

  • Andreja Poje

    (Association of Free Trade Unions of Slovenia)

  • William Rainey

    (UMass Amherst - University of Massachusetts [Amherst] - UMASS - University of Massachusetts System)

  • Mirna Safi

    (Institut d'Études Politiques [IEP] - Paris, CRIS - Centre de Recherche Internationale pour la Sante - UJZK - Université Joseph Ki-Zerbo)

  • Matthew Soener

    (UIUC - University of Illinois at Urbana-Champaign [Urbana] - University of Illinois System)

  • Donald Tomaskovic-Devey

    (UMass Amherst - University of Massachusetts [Amherst] - UMASS - University of Massachusetts System)

Abstract

Global cities contribute to earnings inequality by concentrating high-paying jobs. But how much and why? In this paper, we quantify the contribution of global cities to earnings inequality and examine whether this contribution is attributable to the financialization of cities or their coordinating role in the global trade of goods and non-financial services. Using administrative linked employer-employee earnings data in nine advanced capitalist democracies and published Internal Revenue Service tables for the United States between 1989 and 2019, we show that global cities account for a substantial portion of national and regional increases in inequality. This contribution to inequality is far greater in financial cities than in the most comparable non-financial cities. In addition, the divergence in pay levels between financial and comparison cities increases with the financialization of respective countries. Our evidence thus shows that the contribution of global cities to inequality is driven more by the concentration of financiers than by other functions of global economic coordination.

Suggested Citation

  • Olivier Godechot & Nils Neumann & Lasse Henriksen & Skeie Hermansen & Feng Hou & Naomi Kodama & Zoltán Lippényi & Silvia Maja Melzer & Halil Sabanci & Max Thaning & Paula Apascaritei & Dustin Avent Ho, 2023. "Financialization more than globalization! The contribution of global cities to inequalities," Working Papers halshs-04173209, HAL.
    • Handle: RePEc:hal:wpaper:halshs-04173209
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04173209v1
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