Mobility and Economic Inclusion Are Key to Productive Cities in the 21st Century

Early on the morning of September 9th a boisterous crowd filled the largest auditorium at the World Bank’s headquarters in Washington, DC. The attendees of the 6^th Urbanization and Poverty Reduction Research Conference had plenty to be excited about—some of the leading policy makers and researchers on urbanization from around the globe had assembled to share the latest thinking on cities. Started six years ago as a collaboration between the World Bank and George Washington University, this year’s conference also counted the International Growth Center (IGC) and the Inter-American Development Bank among its sponsors.

The conference could not have happened at a more critical moment. Cities are forecast to be home to two thirds of the world’s population by 2050. The policies and investments made today will shape the lives of many generations to come.

“I can think of no higher calling in the 21^st century than to fight to make the cities of the developing world more livable,” said Edward Glaeser, Professor of Economics at Harvard University and Research Program Director for IGC’s Cities Research Program.

To support that mission, this year’s conference focused on the most critical asset of any city—its people. While a city’s buildings, infrastructure, and spatial design are all important, cities are fundamentally about the people who live in them, their connections with each other, and the productivity of these connections. Speakers throughout the day highlighted three areas where new knowledge can make a difference in the lives of urban residents: mobility, economic inclusion, and participation in markets.

In the conference’s keynote address, Leah Boustan, a Professor of Economics at Princeton University, explored the role that migration within countries can play in creating opportunity. In the United States in the early 20^th century, mass migration from rural locations in the south of the country to urban centers in the north resulted in income gains of 50 percent or more. In the present day, the gains from migration in developing countries are likewise impressive—one study found that rural-to-urban migrants in Kenya earned 160 percent more after moving.

According to Boustan, mobility in the developing world is still low relative to the large potential income gains. Top-down government programs to relocate people have often led to poor outcomes and unintended consequences. Instead, Boustan pointed to modest nudges as a better option. In Bangladesh, for example, a small grant led to a large increase in seasonal migration and a 30 percent increase in consumption among those who migrated. Removing barriers such as housing restrictions or more direct internal controls on movement can also create opportunity for many.

But even when people find their way to cities, a lack of mobility may still prove to be an obstacle. Efficient and affordable transportation between housing and jobs is critical.

“Transportation costs are a huge constraint,” said Edlam Abera Yemeru, Chief of the Urbanization Section of the United Nations Economic Commission for Africa. “They directly impact the way in which workers in African cities are able to be part of the productive economy.”

Research on government investments in transportation from opposite ends of the globe demonstrate just how important good planning can be. Nick Tsivanidis, an Assistant Professor at UC Berkeley, presented his research on Bogota’s TransMilenio, the world’s largest Bus Rapid Transit (BRT) system. TransMilenio started operations in the 2000s, and Tsivanidis found that the city’s investment has more than paid for itself, with benefits both in time saved for commuters and improvements in people’s choice of housing and place of work.

Conversely, research on Jakarta’s BRT system reveals a missed opportunity. According to Alex Rothenberg, an Assistant Professor at Syracuse University, the city’s BRT has done little to alleviate its formidable traffic congestion. His research shows that travel times increased along BRT corridors, the system had little impact on reducing vehicle ownership, and the BRT makes up only about 6 percent of the city’s transportation mode share. Poor design is likely to blame— many routes do not have dedicated bus lanes and underinvestment in sidewalks means that residents have a hard time accessing the system.

While transportation investments are a concrete way to make cities accessible, less visible factors can still limit economic inclusion for disadvantaged groups. In a study of markets in Lusaka, for example, Glaeser and his co-authors found that women entrepreneurs disproportionately bear the burden of weak rule of law—a big reason that women earn half of what men earn on average. Indigenous solutions can help remedy these disparities. In the case of Lusaka, market chiefs can provide minimum standards of justice.

Gender disparities can also have broader effects on society as a whole. In research on Brazil, Juan Pablo Chauvin, a Research Economist at the IADB, found that gender segmentation in labor markets means that increases in demand for labor in male-dominated sectors leads to a higher wage gap between men and women and higher housing costs for everyone.   

A lot has been learned in the six years since the conference began, but this year in particular highlighted the promise of deeper insights into urban policymaking using new troves of data.

“The world of urban economics research has been evolving rapidly,” said Aart Kraay, Director of Research at the World Bank. “One factor is an explosion of new types of data that can shed light on policy questions, including big data from sensors, satellites, and cell phones.”

Remi Jedwab, an Associate Professor of Economics at George Washington University, and his co-authors recently constructed an unprecedented database that includes the age structure of 350 megacities around the world and relate this to growth outcomes. In Beijing, for example, there are 10 adults for every child, while in Bamako there is 1 adult for every child.

In an equally impressive feat of data innovation, Gabriel Kreindler, a Prize Fellow at Harvard University, obtained anonymized cell phone data from Dhaka and Colombo and modeled commuting flows. Kreindler’s proof-of-concept analysis hints at the possibility of unprecedented insights into spatial patterns of economic activity.

As cities become ever more important to the lives and livelihoods of billions of citizens around the world, pushing forward the frontiers of research will be ever more critical in the years to come.