Presentation on A City Perspecitve for Inclusive Growth, made at Regional Studies Association Annual Conference, held in Dublin, Ireland on 4-7 June 2017, by Mr. Joaquim Oliveira Martins, Special Advisor to the Director, Centre for Entrepreneurship, SMEs, Local Development and Tourism More information: http://www.oecd.org/cfe/regional-policy/

1. A CITY PERSPECTIVE FOR
INCLUSIVE GROWTH
RSA Conference
Dublin, 5 June 2017
Joaquim Oliveira Martins
Regional Development Policy Division
OECD Centre for Entrepreneurship

2. Unit of analysis: what is a city?
Defining OECD metropolitan areas
Metropolitan areas are functional urban areas (FUAs) with at least
500,000 inhabitants
FUAs are defined as groups of contiguous municipalities composed
by one or more urban core and a commuting zone
Urban cores: high-density clusters, made of contiguous 1 km² grid cells
with a population density of at least 1,500 inhabitants per km2
Commuting zones: the “worker catchment area” of the urban labour
markets, outside the cores (municipalities sending to the cores 15% or
more of their employment
FUAs are identified consistently using the same method in 30 OECD
countries and are coherent with Eurostat definition

3. A map of French Functional Urban
Areas (FUAs)
• In France our method
allows us to identify 83
FUAs
• Total population in
2011 ranges from
85,000 (Martigue) to
11.7 million (Paris)

4. City growth &
productivity

5. 5
Cities represent an important part of GDP
and employment
Source: Regions at a Glance, 2016
281 metro areas in 30 countries concentrate 49% of population and generate 57%
of GDP and 51% of employment
Per cent of population, GDP and employment in OECD metropolitan areas

6. 6
Metro areas have a large contribution to
economic growth
Source: Regions at a Glance, 2016
Metro areas in
Norway, Japan
and Denmark
accounted for
more than 75% of
national growth in
the period
between 2000 and
2013.
Per cent of national GDP growth contributed by the metropolitan areas (2000-13)

7. Distribution of the contributions to aggregate
growth of OECD metropolitan areas
Source: OECD (2013), Regions at Glance

8. Metropolitan areas concentrate highly skilled
people
8
Share of working-age population with tertiary education, 2012
Source: OECD (2016) Making cities work for all; OECD Publishing, Paris.

9. Productivity increases with City size
even after controlling for sorting
9
Doubling the size of a city ≈ 3-5%
productivity increase
Cityproductivity(normalised)
Source: Ahrend, R., E. Farchy, I. Kaplanis, A.C. Lembcke (2014), “What makes cities more productive? Evidence on
the role of urban governance from five OECD countries”, OECD Regional Development Working Papers, No. 2014/05,
OECD Publishing, Paris.

10. On average, household incomes are 18% higher
in metropolitan areas than elsewhere
10
Metropolitan vs. non metropolitan household disposable income ratio by country
per equivalent household; 2014 or latest available year
Source: OECD (2016) Making cities work for all; OECD Publishing, Paris.

11. Annual per capita GDP growth rates (1995-2010) and driving time to
the closest metro area of 2 million or more inhabitants
Growth spillovers of large cities:
Distance growth gradient in EU regions
11

12. Large differences in the governance of
metropolitan areas
12
Administrative fragmentation of
metropolitan areas

13. City productivity decreases with fragmented
governance
13

14. Inequalities in cities

15. Data sources and collection for income in cities
For most countries income data was collected in micro-aggregated
form (i.e. municipality) from tax records
15
Country Source
N. of local
units
N. of
metro
areas
Type of data
Information on
income
distribution
Years
Australia Australia Bureau of Statistics 1125 6 Tax records No 2006-11
Austria Statistics Austria 649 3 Tax records Yes 2004, 2007, 2012
Belgium Statistics Belgium 200 4 Tax records Yes 2005, 2007, 2013
Canada Statistics Canada - 34 Tax records Yes 2006, 2013
Chile CASEN – Min. of Social Devel. 62 3 Household income survey Yes 2009, 2013
Denmark Statistics Denmark 49 1 Register data Yes 2000-13
Estonia Estonian Tax and Customs Board 28 1 Tax records No 2003-14
Finland Statistics Finland 22 1 Register data No 2000-14
France INSEE 1409 15 Tax records Yes 2001-11
Hungary
National Tax and Customs
Administration of Hungary
183 1 Tax records No 2000-13
Italy Ministry of Economy and Finance 775 11 Tax records Yes 2008-13
Japan
Ministry of Internal Affairs and
Communication
570 36 Tax records No
1990, 1995, 2000,
2005, 2013
Mexico CONEVAL 296 33
Small areas estimations
using hh survey and Census
Yes 2010
Netherlands CBS (Regional Income Research) 130 5 Register data No 2006-13
Norway Statistics Norway 30 1 Tax records Yes 2006-13
Sweden Statistics Sweden 54 3 Register data Yes 2000-13
United Kingdom ONS 2974 13 Small area estimations No 2008, 2012
United States ACS web platform 380 70 Household survey Yes 2010-14

16. 16
Gini index of disposable income (after tax and transfers), 2013
Disparities of household income are large
within regions, mainly in capital cities
Source: OECD Income Distribution Database and OECD Regional Well-being database
Eastern
Slovenia
Capital
Oslo
and
Akershus
Åland
Prague
Brussels
Capital
Region
Bratislava
Region
Central
Hungary
Vienna
Stockholm
North
Holland
Hesse
Ile-de-France
Central
Region
Hokkaido
Ticino
Southern
and
Eastern
Ontario
Sicily
Western
Australia
Ceuta
AttikiNorth
Island
South
East
England
Estonia
Jerusalem
District
District
of
Columbia
Northeastern
Anatolia
West
Santiago
Metropolitan
Oaxaca
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.55
#REF!
Regional value National average

17. Larger cities are more unequal
17
Metropolitan population and income inequality, circa 2014
Metropolitan size and inequality, once controlled for income levels and country effect
Brussels
Antwerpen​
Liège
​
Red Deer
​
Calgary
​
​
Lethbridge
​
​
​
Thunder Bay
​
Québec
​
Trois Rivières
​
Montreal
​
Sherbrooke
​
​
Toronto
​
​
Brant
​
Windsor
​
Iquique
​
Antofagasta
​
​
Calera
​
​
San Antonio
​
Rancagua
​
​
Linares
​
​
Temuco
​
Osorno
​
Punta Arenas
Paris
​
Toulouse​
Saint-Etienne​
​
Rouen Roma
Milano
Napoli
​
​
​ Tijuana
​
Hermosillo
​
Reynosa
​
Torreón
​
​
León Guadalajara
​Pachuca de Soto ​
Mexico City
​ Toluca
​
​
​
​
Oslo
​
Malmö
​
Portland
​​
Buffalo
​
Albany
​
Boston
​
​
Cleveland
​
Omaha
New York
​
​
Philadelphia
​
Denver
​
​
Cincinnati
Washington
​
​ San Francisco
​
Fresno
Las Vegas
​
​
Albuquerque
Memphis
​
Los Angeles
​
Atlanta
​
Dallas
Houston
Miami
McAllen
0.05
0.1
0.15
0.2
0.25
10 11 12 13 14 15 16 17
Ginicoefficient(componentplusresiduals)
City population (natural logarithm)

18. Only 1/5 of OECD metro areas have grown
inclusively
18
Change in GDP pc and in Gini coefficient of household disposable income, 2000-13
Source: OECD (2016), Making Cities Work for All, OECD Publishing, Paris.

19. Fragmented Governance is correlated with higher
inequalities in cities
19
Hypothesis: Fragmented metropolitan governance can facilitate
segregation at the level of local units.
-.05
0
.05
.1
.15
0 .2 .4 .6 .8 1
Administrative fragmentation
Controlling for country
fixed effects and other
city characteristics
(i.e. income ,
population, spatial
structure), higher
administrative
fragmentation is
associated to higher
spatial segregation by
income in different
municipalities
(cf. Brezzi, Boulant &
Veneri, 2016)

20. Overly restrictive land use policies can harm
inclusiveness via rising housing costs
Annualchangehouseprices
(2000-2012)
Annual change in developed land
per capita (2000-2012)
• Land use regulations
should aim to
prevent sprawl…
• …but have to
provide sufficient
space to construct
housing for growing
populations
• Otherwise, housing
costs rise
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
-1.0% -0.5% 0.0% 0.5% 1.0%

21. Policies & Governance

22. 1. Inequality goes beyond income
 City level data on different well-being dimensions can
help design integrated multi-dimensional policies.
2. Polarization of skills in cities
 Comprehensive packages of structural policies targeted
to the local conditions aligned between national and local
government.
3. Inequality in cities also mean spatial segregation
 Appropriate governance systems of metropolitan areas
can reduce the cost of administrative fragmentation which
is associated to higher inequality between municipalities
How to tackle inequalities in cities?

23. How are cities being governed?
• Case studies suggest that governance bodies can
reduce the “cost” of administrative fragmentation
• OECD Metropolitan Governance Survey:
– Collect data on governance structures for all ~270 metropolitan
areas in the OECD
– Provide representative country overviews
– Develop categories to classify governance structures and enable
quantitative analyses
– Use the data for quantitative studies on the effect of
metropolitan area governance
23

24. • Data collected
for around 270
metro areas
• Governance
Bodies exist in
more than half
of them
• Most common
are bodies
without own
competencies
Governance Bodies could be more
developed
Governance Bodies by Type
35%
17%9%
5%
34%
Informal/Soft-
coordination
Inter-municipal
authorities (Type ii)
Supra-municipal
authorities
Metropolitan cities
No Governance
Body

25. Make planning more flexible and foster
good land use
How land is used
Public policies aimed at steering
land use
• Spatial planning
• Transport planning
• Land use planning
• Environmental regulations
• Building code regulations
Public policies not targeted at land use
• Tax policies
• Transport taxes and subsidies
• Fiscal systems and inter-governmental
transfers
• Agricultural policies
• Energy policies
How land is permitted to be used How individuals and businesses
want to use land

26. Five key areas to advance inclusive
growth in cities (1/2)
Invest in education and training for local population, work with employers to upgrade the
skills of their staff
Facilitate immigrant, youth and women entrepreneurship (example, the Young Urban
Movement Project in Swedish and French cities supports young second-generation
immigrants with entrepreneurship programmes).
Support workers’ co-operatives (example, Canadian cities have set up community
investment funds to support co-operatives and social enterprises to fight in-work poverty).
1. Fostering quality jobs for all
2. Improving equitable access to education in cities
Promote controlled school choice schemes and school voucher programmes
Invest in early childhood education programmes
Establish partnerships to target vocational education and training (VET) programmes on
locally job-creating industries (example, pathways to education in Toronto)

27. Five key areas to advance inclusive
growth in cities (2/2)
3. Building more inclusive urban housing markets
Promote mixed-income neighbourhoods, for example by better targeting housing allowances
(example, Moving to Opportunities in US cities).
Remove regulatory barriers to the development of affordable, quality housing (example, law
on urban solidarity in French cities)
4. Offering accessible, affordable and sustainable transport
Assess the combined impact of transport, housing and other investment decisions on
different socio-economic groups (example, Central Santiago de Chile regeneration)
5. Promoting healthy neighbourhoods and reliable public services
Facilitate access to healthcare for all and to other essential goods and services such as
quality nutrition (example, El médico en tu casa in Mexico city)
Develop comprehensive urban regeneration strategies
Integrate the social impact of investment in infrastructure, in ex-ante assessment
decisions

28. Bottom-line
• Positive Economics (what to do?) need to
be combined with Governance (How to do
it?) in order to provide a better set of
policies to deal with inclusive growth
• Place-based policies help introducing a
systems approach to inclusive growth
• Place-based policies also support the
construction of a more integrated
structural policy package

29. Thank you!
https://www.oecd.org/gov/making-cities-work-for-all-
9789264263260-en.htm
joaquim.oliveira@oecd.org
paolo.veneri@oecd.org

30. References
Ahrend, R., Gamper C., Schumann A. (2014), The OECD Metropolitan governance survey. OECD Regional
Development Working Papers , 2014/04.
Boulant, J, Brezzi, M., Veneri, P. (2016), Income levels and inequality in OECD metropolitan areas. A
Comparative Approach in OECD Countries”, OECD Regional Development Working Papers, 2016/06, OECD
Publishing, Paris. http://dx.doi.org/10.1787/5jlwj02zz4mr-en
OECD (2015), The Metropolitan Century. Understanding Urbanisation and its Consequences, OECD
Publishing, Paris.
OECD (2016) ,Regions at a Glance 2016, OECD Publishing. http://dx.doi.org/10.1787/reg_glance-2016-en
OECD (2016), Making Cities Work for All, OECD Publishing. http://dx.doi.org/10.1787/9789264263260-en
OECD (2012), Redefining “Urban”: A New Way to Measure Metropolitan Areas, OECD Publishing.
http://dx.doi.org/10.1787/9789264174108-en
Veneri P. (2017) “Urban Spatial Structure in OECD Cities: is Urban Population Decentralising or Clustering?”,
Papers in Regional Science
Veneri, P., Ruiz, V. (2016), “Rural-to-urban population growth linkages: evidence from OECD TL3 regions.
Journal of Regional Science, Vol. 56(1), pp. 3-24.