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Dense cities lead to ‘greater inequality’

Words: Laura Edgar
The Mayor want London to be denser / iStock-943535610

Cities that are densely built with people living and working in close proximity are economically efficient but lead to higher levels of inequality, suggests an LSE report.

A study by the London School of Economics and Political Science (LSE) shows the range of benefits that dense cities have, including higher productivity, more innovation, shorter commutes, cheaper provision of public services and a lower carbon footprint.

But these advantages come at a cost, it warns.

Space is at a premium, making housing more expensive and levels of inequality higher. While higher-skilled workers benefit from higher wages, lower-skilled workers, renters and first-time buyers struggle with housing costs and affordability.

Furthermore, city dwellers are exposed to higher levels of pollution because of traffic congestion.

Despite this, the research says that densifying a “typical” city in the developed world is likely to have a positive overall effect.

The costs and benefits of density in cities in developing countries are larger and there is less evidence available, meaning the overall effect is not as clear.

Noting predictions from the Organisation for Economic Co-operation and Development that almost 70 per cent of the world’s population will be living in urban areas by 2050, the researchers say most countries are already pursuing policies that encourage the building of dense cities. However, they added, this is the first study to consolidate the research on the effects of densification and compare the costs and benefits.    

More work is needed in this area to draw strong conclusions: the findings suggest that there is a trade-off between economic efficiency and equality, to which urban planners and decision-makers should pay attention, according to the researchers.

Co-author Dr Gabriel Ahlfeldt, from the department of geography and environment at the LSE, said: “Most countries pursue policies that implicitly or explicitly aim at promoting ‘compact urban form’, but so far these policies have not been well-grounded in evidence.

“With this article, we hope to contribute to transparent evidence-based policymaking, by highlighting the various economics costs and benefits of density, and showing the trade-off between economic efficiency and inequality.”

The study was published in the Journal of Urban Economics.

Image credit | iStock