For every country studied, we compare two cities: the financial hub housing the main national markets and related industries, and a second, comparison city that is closest in terms of population, employment and share of GDP. <\/p>\n
In the US, for instance, we compared New York to Los Angeles. In Spain, we compared Madrid to Barcelona, in Japan it was Tokyo and Osaka, in France, Paris and Lyon, the Netherlands, Amsterdam and Rotterdam, and so on.<\/p>\n
We wanted to understand whether the earnings of the top 1% were increasing, whether higher earners were clustered in certain cities, and what role the finance sector plays in determining income inequality.<\/p>\n
Read more: A richer, more concentrated top 1%<\/p>\n Across all 10 countries, the earnings share of the top 1% (i.e. how much of the total income went to those one percenters) increased over time, growing by an average of 0.17% per year. Countries such as Denmark and Sweden experienced the smallest rises, while the US posted the largest.<\/p>\n That is the aggregate for top earners: already high incomes increasing year after year. Our findings that are consistent with data documenting the global increase in income inequality<\/a>. But where do these high-flyers live and work?<\/p>\n In all of the countries we studied, the highest earners nationwide were more concentrated in financial cities than in the second cities. In 1990, earnings in financial cities were on average 1.7 times more likely to be in the national top 1% than those in comparison cities. Nearly two decades later, they are 2.4 times more likely.<\/p>\n There is a large gap between financial and non-financial cities\u2019 contributions to their country\u2019s earners. Financial hubs were consistently responsible for an outsized percentage of the income growth among very top earners. On average, financial cities accounted for 65% of the increase in their countries\u2019 top 1% earnings shares. In France, Spain and Sweden, financial cities accounted for more than 100% of the increase, meaning that earnings in other cities actually declined.<\/p>\n The growing gap between financial and comparison cities is mainly driven by the surge in earnings in the financial sector. We estimate that this sector accounts for 30% of the divergence between the two types of cities.<\/p>\n Read more: Centralised economies<\/p>\n The research\u2019s two-decade-long timeframe helps interpret the trend. In the 1990s, many finance firms distributed ballooning profits among their employees, pushing salaries skyward. <\/p>\n As another of our studies<\/a> has shown, even when banking profits took a hit \u2013 during the 2008 crisis and its aftermath, for instance \u2013 salaries remained high. This was even the case when countries enacted specific regulations like capping bonuses to curb salaries in the sector and discourage risk taking.<\/p>\n Broader national contexts \u2013 including overall income inequality levels and how centralised and diversified economies are \u2013 also make a difference.<\/p>\n In countries such as Spain, Sweden and Denmark, financial cities contributed substantially to relatively modest increases in overall top 1% earnings shares. In contrast, in Germany, the US and Canada, financial cities played a smaller role in much larger aggregate increases in national top earnings.<\/p>\n Sweden, Norway and Spain are generally more centralised economies than Germany, Canada or the US, so their financial hubs naturally play a larger role. <\/p>\n Additionally, in North America, finance\u2019s wage-setting practices have spread to other sectors such as tech. Meanwhile in Scandinavian countries, finance has remained a niche sector, with exceptionally high wages but limited spillover into other sectors.<\/p>\n Financialisation, globalisation and skills<\/p>\n Some 75% of European Union citizens live in cities and urban areas<\/a>, a figure set to rise to 78% by 2050. Around the world, cities are expanding.<\/p>\n This makes it vital to understand what makes them the way they are. Globalisation is often blamed for income inequality in cities because cities provide the high-paying professional infrastructure \u23af the consultants and lawyers as well as the bankers \u23af for global business. Our research shows that some of the cities with the largest surge in earnings concentration are places like Stockholm and Madrid \u23af important European capitals but not centres of global commerce.<\/p>\n Another suggested cause for income inequality is that highly educated workers and productive firms cluster in amenities-rich cities. But our research carefully paired cities with similar amenities and skill levels. In every case, the financial city contributed disproportionately to top earnings, and the other did not. <\/p>\n It is therefore safe to say that the presence of a financial sector is the determining factor in income inequality. This finding has profound implications for the sorts of cities, and societies, we want to create.<\/p>\n A weekly e-mail in English featuring expertise from scholars and researchers. It provides an introduction to the diversity of research coming out of the continent and considers some of the key issues facing European countries. Get the newsletter!<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Try to imagine the history of New York without Wall Street, or London without the City. It\u2019s not…\n","protected":false},"author":2,"featured_media":579174,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":["post-579173","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/579173","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=579173"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/579173\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/579174"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=579173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=579173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=579173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n Top earners are increasingly isolated at work \u2013 here\u2019s why it matters<\/a><\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/08\/file-20260722-57-77e8ja.jpg\")
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\n Author provided<\/p>\n
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