How Urbanization Affects Income Inequality

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By Jori Hamilton

The UN reports that the world has been urbanizing rapidly since 1950 and that 6.7 billion people will live in urban areas by 2050. This shift from people living in rural areas to urban areas is a process known as urbanization. Urbanization is caused by several factors but is generally driven by folks looking for better-paying jobs, greater access to healthcare, and higher education standards.

Urbanization does have the potential to improve human life and help us lead sustainable, equitable lives. However, urbanization is currently a major contributing factor in income inequality—the disparate distribution of wealth between rural and urban areas. To get a better understanding of income inequality, here are three ways urbanization affects income inequality.

Better Paying Jobs

According to U.S. census data, folks living in urban areas earn an average annual salary 4% higher than their rural counterparts. This means that Americans who decide to move to urban areas can expect to see a salary increase of roughly $2,000. Additionally, cities hold more work opportunities for folks looking to shift careers or find work. While this is great for people who want to live in cities, it means that those who wish to stay in their rural towns may be forced into making the move to a city to find competitive salaries and employment opportunities in their fields.

Disparate Education Standards

Research conducted by the US Department of Agriculture has found that educational attainment for people living in rural areas is lower than in urban areas. Only 21% of those living in rural areas gain a Bachelor’s degree compared to 34.7% in urban areas. While higher education isn’t the path for everyone, the broad issue here is that higher education levels are associated with higher income in both urban and rural areas. In both areas, those with a Bachelor’s degree earn a salary around $15,000 more than their peers who hold only a high school diploma.

A recent study by the Center of Public Education found that education policy in the US has a metropolitan-centric attitude. This means that policymakers—who aim to improve education standards for the 90% of Americans who live in urban areas—often fail to account for the needs of rural populations. As a result, rural Americans have poorer literacy rates, limited access to advanced coursework, and send fewer high school graduates to college. This metropolitan-centric approach to education policy in the U.S. drives inequality and is a significant factor in nationwide income inequality.

Additionally, poor education standards in rural areas disproportionately affect children from minority backgrounds. The same study by the Center of Public Education reported that “black, Hispanic, Pacific Islander, and American Indian/Alaska Native children are more likely to attend a school experiencing high levels of poverty than are white or Asian children.” Moreover, poverty in these areas is reported as being cyclical and deeply rooted in the experience of children attending poor rural schools.

Automation and Job Opportunities

We are entering an age of automation. This means that, increasingly, people’s jobs are being replaced by AI and automation. A trend towards automation is expected to unequally affect rural Americans, as estimates predict that 25% of rural workers will be displaced in the coming years. In addition, automation will likely affect those who don’t hold bachelor’s degrees more severely, as careers in food service and production are likely to be replaced by AI and automation. Meanwhile, careers in digital media and creative arts are far less likely to be affected by automation and AI but typically require a higher level of education for entry-level positions. These careers demand creative thinking and personal touches that AI is simply incapable of achieving.

Our Urbanized Future

If things are left to continue in our current direction, income inequality will be exacerbated by technological developments and the centralization of job opportunities in urban areas. However, urbanization does not have to lead to adverse outcomes for rural populations and global communities. Instead, policymakers must find ways to make urbanization a choice, rather than a necessity for those living in rural areas.

Jori Hamilton


Jori Hamilton is an experienced writer residing in the Northwestern U.S. She covers a wide range of topics but takes a particular interest in topics related to politics, urban living, society, and health. If you’d like to learn more about Jori, you can follow her on Twitter and LinkedIn.

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