Does urbanization increase inequality? Race, gender, and the urban wage premium

Workers in denser, larger cities have higher wages, though recent research suggests this “urban wage premium” varies for different groups. This paper asks whether changes in density within city-regions are associated with changes in racial and gender inequality. The main results suggest that a 100 person per square mile increase in population density is associated with 32.9, 46.1, and 27.5 cent increases in hourly Black-White, Latinx-White, and female-male wage inequality respectively. I conceptualize and find suggestive evidence in favor of a spatial mechanism that channels this relationship—as cities get denser, congestion also rises, with disproportionately adverse effects for women and people of color. I show that the relationship between changes in density and changes in inequality is higher when commute times also rise, and that increasing density within cities is associated with increasing commuting inequality. Overall, this research highlights how the process of urbanization may contribute to social inequality.