Cities, economic growth and poverty

Economic growth at city level does not always result in a reduction in poverty levels, particularly in the short term, according to a Joseph Rowntree Foundation study that looks at the evidence on the connections between cities, economic growth and poverty in the United Kingdom.

Key findings

  • Economic growth does not always reduce poverty. Many of the most economically successful city economies have experienced stable or increasing poverty rates even during periods of economic growth.
  • Increases in output or productivity at a local level are important for economic success, but have little short-term impact on poverty. Employment growth has the most significant impact. The quantity and quality of new jobs is the critical factor in reducing poverty in cities.
  • The benefits of growth in innovative, knowledge-based sectors will not automatically 'trickle down' to households in poverty. There is no guarantee that all citizens will benefit from growth in their local economy and growth may not reach all parts of a city. Cities need to be clearer about who will benefit from different local growth initiatives and how.
  • A balance and range of skills is particularly important in both ensuring urban economic growth and reducing poverty. Low- and intermediate-level skills and the quality of entry-level jobs should be considered integral to developing a sustainable urban economy.

Cities should not approach growth and poverty as two separate agendas, the study's authors conclude. Reducing poverty brings a range of economic and financial benefits, which can be important in driving local economic growth and managing future demand on local public services.

Source: Neil Lee, Paul Sissons, Ceri Hughes, Anne Green, Gaby Atfield, Duncan Adam and Andres Rodriguez-Pose, Cities, Growth and Poverty: A Review of the Evidence, Joseph Rowntree Foundation
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Publication date: 
Feb 7 2014