Living standards continue to diverge within many economically advanced countries as poorer regions struggle to catch up with richer ones. Half of the 34 OECD countries have seen the income gap between their best-off and worst-off regions widen since the 2008 crisis, according to new OECD research.
The OECD Regional Outlook 2014 shows that in 10 OECD countries, over 40% of the national rise in unemployment since the crisis was concentrated in one region.
Some of the starkest income inequalities show up in big cities. The OECD recommends better management of urban areas, where two in three people live, as a way to improve prosperity and reduce inequalities. Well-run cities can improve efficiency and productivity within their boundaries and in surrounding areas by cutting commuting times, making streets safer, reducing air pollution and improving access to public services.
“The regional convergence engine has stalled since the crisis. National standards of well-being are not felt equally by people living in different regions,” said OECD Secretary-General Angel Gurría, presenting two new reports on regions at the 12th European Week of Regions and Cities in Brussels. “Smarter public investment, especially in cities, and reforms of outdated local government structures would help to address this.”
The OECD area counts more than 140,000 sub-national governments, often organised into centuries-old structures that lead to fragmentation and inefficiencies. Addressing these problems could help boost growth nationally and reduce regional inequalities.
A second report, How’s Life in Your Region, reveals big differences in overall well-being among 362 regions within OECD countries by examining areas ranging from air quality and life expectancy to per-capita income, employment and Internet access. It shows that:
•Spain and Italy show the widest regional disparity for unemployment and the Netherlands shows the least. Youth unemployment varies most in Italy.
•Regional inequality in household income is lowest in Austria and highest in Australia.
•Regional differences in life expectancy have grown in 18 of 30 countries since 2000. The number of years a person can expect to live in Portugal varies by almost four years from one region to another. In Greece, the variation is only 11 months.
•South East England is in the top 20% of OECD regions for jobs whereas North East England is in the bottom 30%.
•France’s Lower Normandy region is among the safest 20% of OECD regions, while Corsica is in the bottom 10%.
•More than 40% of US regions have a quarter of their population at risk of falling into poverty versus less than a tenth of regions in comparable European economies.
Regional variation in unemployment rate, 2013