Financialization More Than Globalization! The Contribution of Global Cities to Inequalities

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.