The most important urban decisions of this century are being made right now, mostly in cities you’ve never heard of.
Today, 4.7 billion people, about 58 percent of the world’s population, live in urban areas. By 2050, that share will cross 70 percent. The bulk of that growth won’t happen in megacities. The next chapter of urbanization will be defined by the rapid spread of smaller cities across the globe, many of them in Sub-Saharan Africa and South Asia, where planning capacity is weakest and fiscal resources are thinnest. That combination should concentrate minds.
Why the jobs case for cities is stronger than it looks
The standard argument for urban productivity focuses on firms: agglomeration, knowledge spillovers, lower trade costs. All true. But the jobs argument starts somewhere else.
Cities offer workers something rural areas structurally cannot: a thick labor market. Thickness means more firms competing for workers, more occupations available, and more options when one sector contracts. When one industry slows, workers in cities can often shift into other sectors without having to move away. That is job security of a particular kind, one that has nothing to do with formal contracts and everything to do with density.
Skilled workers learn faster when they are surrounded by peers who have similar or complementary skills, ideas, and experience. The result is higher productivity in urban areas, reinforcing cities as engines of economic growth. This isn’t just a high-skill story. In many low- and middle-income economies, even low-wage, often informal jobs in cities can offer pathways to build skills, gain experience, and move into better opportunities over time. The informal economy in an African or South Asian city is frequently a stepping stone. The problem is what happens above it: when the city lacks the housing, transport, and services that make the next rung accessible, the steppingstone becomes a landing.
And the wage premium is real, though not simple. Jobs in cities tend to be higher skilled, formal, and more productive, and that usually means higher pay.
The complication: higher urban wages often do little more than offset the added expenses of city living. Rents absorb the premium. The jobs case for cities, on welfare grounds, ultimately depends on whether the city is planned well enough to keep housing and commute costs from eating the earnings gain.
The math on slums
Nearly one in four urban residents around the world live in slum conditions, many of them in low-income countries. That fraction sounds like it should be falling as incomes rise. In some regions it is. In Sub-Saharan Africa, the slum population fell from more than 60 percent to just over 50 percent over twenty years. The share has been rising again since 2020.
READ MORE: https://blogs.worldbank.org/en/opendata/the-world-is-urbanizing-fast—the-window-to-get-it-right-is-nar
