The urban revival of the past two decades has led to a striking contradiction. As high-tech talent and industry have moved back to many cities, increasing their economic output and lowering unemployment rates, these cities have become increasingly unequal. Now a new study documents in meticulous detail the extent to which rising innovation and deepening economic segregation in cities are two sides of the same coin.
The study, by economists Enrico Berkes of Northwestern University and my University of Toronto colleague Ruben Gaetani, uses sophisticated statistical modeling to parse out the connection between innovation and economic segregation. The study makes use of the researchers’ database of more than 2 million geographically coded and referenced patents (which I previously wrote about here) for U.S. metros (measured as commuting zones), going back more than 40 years. In this study, they specifically compare patent data to measures of economic segregation across census tracts—including measures of segregation along the lines of income, education, and occupation—for the period from 1990 to 2010. Their models include a wide range of variables to control for population, income levels, industry differences, and political and economic factors over this period.
Their baseline finding is as remarkable as it is disturbing: The level of patenting, or what the researchers call “innovation intensity,” is responsible for more than half (56 percent) of the variation in economic segregation among cities. Furthermore, this innovation intensity is responsible for fully 20 percent of the entire increase in economic segregation that occurred in the two decades between 1990 and 2010. Indeed, they find that economic segregation has increased considerably more than income inequality over this time frame.