Comparing Intra-Urban Inequalities in Shanghai and Mexico City
Updated: Mar 8, 2019
I am in the third week of my trip to China as a student fellow of the India-China Institute. I came to this trip determined to find out how is it that what I usually research in México City -namely, who has access to economic opportunities and prosperity within the city, who does not, and why- plays out in Chinese cities, which have a completely different institutional setting, a different kind of economy, and a very different role of the state over social life. After spending two weeks in Shanghai, I have come to the conclusion that despite both cities -Mexico City and Shanghai- produce high rates of intra-urban inequality, they are doing so through different mechanisms and the outcomes are not that similar.
In the case of Mexico City, intra-urban inequality is likely to be produced through social stratification related to class and race, and the outcomes resemble what Charles Tilly (1998) has named durable inequality. In the case of Shanghai, intra-urban inequality is likely to be produced through social stratification related to citizenship status, but the outcomes are not as durable as those theorized by Tilly. The outcomes in the case of Shanghai look more like what I will call here floating inequality, which means that populations experience intra-urban inequality for limited periods of time and for a specific purpose.
In what follows, I explain the theoretical approach of the comparison, present the cases, and discuss two lessons that can be learned from the assessment.
Economic opportunities and prosperity within cities
Cities can be thought of as colossal productive forces that create economic opportunities and prosperity for its population (Garza, 2013). That characteristic can explain why so many people around the globe have migrated to cities in the search for better prospects in life (Glaeser, 2011). Whether through participating in commerce, providing some kind of service, selling their labor power in the labor market, even by participating in the informal sector, or engaging in any other kind of economic activity, everyone makes their living thanks to the city and its economic agglomerations.
Unfortunately, not everyone has equal access to the economic opportunities, wealth, and prosperity produced by cities. While some have access to capital to start a business, others are excluded from capital markets. Some people have more human and social capital than others, which gives them a head start over the rest of the population. Labor markets are highly segmented and only the well-educated can aspire to the better-paid jobs. Some population lives near the economic hubs or are well connected to them by urban infrastructure, while others are located far away from economic activity and lack the means to reach it. These characteristics make a difference in the extent to which populations have equal access to economic opportunities and prosperity within cities.
Both Mexico City and Shanghai are thriving economic hubs in their own countries and create important economic opportunities for its inhabitants. Sadly, both cities have also seen soaring economic inequality over the last two decades . In both cases, large percentages of the population are being excluded from accessing better-paid jobs and outcast from the welfare system. The interaction of these two areas is an important one for the study of urban inequality and the prospects of social mobility. Those that lack access to the welfare system will have to satisfy their needs like education, health, and housing through the private market, which in turn will have an impact over their income. If on top of that, people are outcast to the lower-paid jobs, being out of the welfare system will have a huge impact on their real incomes, which in turn will have a negative effect in their prospects of social mobility.
Although the outcome in both cities seems to be the same -soaring intra-urban inequality-, a closer comparison between the two cities shows that the processes of exclusion of the city as a productive force are actually taking place through different mechanisms and that the outcomes might be also different.
The case of Mexico City
In the case of Mexico City, having access to the better-paid jobs and a social safety net seems to depend solely on individual effort. Supposedly, those that invest in getting educated or developing skills will acquire the required credentials to access any job and move forward in the social ladder. Any person, regardless of their place of origin in the country, can move to Mexico City to participate in the wide variety of economic activities. The welfare system is regulated at the national level, so every Mexican citizen has the same right to the social safety net regardless of where they live or their place of origin. The only requirement to have access to the full coverage of welfare in Mexico is having a formal job. However, this alleged individual-effort dynamic is actually fed with loads of cumulative inequality, and by class and race discrimination.
Santa Fe, Mexico City, Mexico. Fhoto by Johnny Miller/Thomson Reuters Foundation
The cumulative inequality sparks because labor markets -especially those with high-productivity better-paid jobs- tend to hire the better-educated, and the households that were well-off in the first place can provide a better education to their members than poorer households. Access to the public education system is free and guaranteed for every Mexican citizen, including tertiary education. Nevertheless, the public education system in Mexico has a well-deserved reputation for delivering a low-quality education. Those households with enough economic resources will opt for sending their kids to private schools, including private universities. This dynamic delivers a cumulative disadvantage to poorer households and a cumulative advantage to the well-off.
The class and race discrimination spark from a severe -often neglected- tendency of selection bias from employers. The recipients of degrees by well-renowned private universities will be favored over those coming from public universities. Having the right connections plays a key role in getting the jobs, and those from private universities or well-off households tend to be well connected to firms’ management. Recent studies by the Mexican Statistics Institute (INEGI) have shed light on the overt pigmentocracy at work in Mexico . The INEGI study shows that people with lighter skin tone tend to have the better-paid management jobs, while people with darker skin tone tend to be paid less and have lower ranks in firms.
As a result, in the case of Mexico City, those that were better off in the first place have better access to the formal jobs and therefore to the full range of the welfare system. Conversely, those that were worse off in the first-place face difficulties to gain access to formal jobs and therefore to a social safety net.
The case of Shanghai
In the case of Shanghai, having access to the better-paid jobs and to the welfare system seem to be two completely different arenas, but they are considerably intertwined. On the one hand, accessing the better jobs seems to be dependent on having a good education. On the other hand, having access to the welfare system within the city is dependent on having a local hukou , that is, on the citizenship status of being a local resident of the city. These two dimensions interact to give an advantage to the local residents of Shanghai in getting the high-productivity better-paid jobs while forcing the bulk of migrants -which lack a local hukou from Shanghai- to work in the low-skilled and low-paid sector of the economy.
Street market in YangPu District, Shanghai. Photo by David López García
The labor market in Shanghai is slightly more open to the migrants than the welfare system. While many employers reserve their jobs for people with local hukou, others are open to hiring migrants. The mix is very complex. For example, I learned that the Shanghai Metro System Enterprise would hire a well-educated migrant to fill an engineering or maintenance position, but the low-skilled jobs -like being a security guard or a clerk in an information desk in a metro station- are reserved for people with local hukou. As a result, well-educated migrants have a shot at getting a high-paid job, but low-skilled uneducated migrants are forced to work in the lower-paid jobs in which no local resident would work, or even in the informal sector of the economy.
Nevertheless, having access to a formal job -and unlike the case of Mexico City- does not translate automatically into having access to the welfare system. This is problematic because the bulk of migrant workers are not entitled to receive health services, unemployment insurance, housing support, or a space for their children in the public-school system, and therefore have to pay for these services in the private market. As a consequence, the vast majority of migrant workers rent a small room with poor housing conditions, send their kids back to their places of origin to attend public schools, and return to their places of origin once they have reached retirement age. Only the very well-educated migrants that manage to get a high-paid job will succeed in changing their citizenship status to a local hukou.
But once again, having access to a high-quality education is also an area of cumulative inequality for the population without a local hukou. As the only option for migrants to send their kids to school in the city is the private market, they tend to send their kids back to their place of origin to attend public schools. These kids are known in China as the left behind. The gap in educational performance of the left behind kids compared to those with local hukou that attend public school in big cities and its implications for social mobility in China is increasingly getting the attention of scholars. Given this educational performance gap, the kids from big cities tend to score higher in the gaokao -the Chinese national college entrance examination- and getting the limited spaces in top universities. This outcome reinforces the current trends of intra-urban inequality by the following logic: if it is true that the people with local hukou of Shanghai get the best education, and if it is true that only the better-educated get the better-paid jobs, then the people with local hukou are getting the better-paid jobs.
But there is an important difference
There is one difference, though, between the Mexico City case and the Shanghai case, which I think is playing a role in defining the outcomes. In Mexico, the welfare system applies at the national level and makes no distinction of citizenship status, so those without a formal job are always excluded from the welfare system regardless of where they decide to be located. In the case of China, given that every province is autonomous to decide its own welfare system, and that the migrants in big cities actually have a local hukou from their place of origin, they remain entitled to the welfare system in their province of origin. This characteristic seems to be having an effect on the trends of migration in Shanghai and even China. Rural migrants tend to go to the city during their prime working age but spend their earnings in building assets in their places of origin. Once they reach retirement age, they go back to their villages and are able to enjoy a good life, with a source of income due to their assets and the benefits of their local welfare system.
The migrant workers will leave the city at some point, but new waves of migrant workers will move to Shanghai to substitute those that go back to their villages. Eventually, some of them will achieve to change their citizen status and obtain a local hukou, but only in a few rare cases. The vast majority will send their kids back to their village to attend public school and will move back to their place of origin once they reach retirement age. This cycle will go on for generations.
What can we learn from the comparison?
At least two lessons can be drawn from the comparison. The first is that the mechanisms through which intra-urban inequality is growing in both cities are quite different. The second is that the outcomes are not as similar as one might think. Both cities are producing huge inequality. However, in the case of Shanghai, the inequality being produced seems to be temporary, while in the case of Mexico City, the inequality being produced is more durable.
In regard to the mechanisms, those in Mexico City seem to be more related to cumulative inequality due to social stratification by class and race. Those with access to private education, connections, and a lighter skin will tend to do better in the ladder of social strata. In the case of Shanghai, the mechanisms seem to be more related to cumulative inequality due to citizenship status. In addition to being entitled to the local welfare system, those with a local hukou from Shanghai will tend to be better educated and will, therefore, get the high-productivity better-paid jobs. In both cities, these mechanisms work to better include some populations over others in the distribution of the wealth and prosperity created by the city.
In regard to the outcomes, despite both cities are producing high rates of inequality, the effects of this inequality over a person’s prospects in life in Mexico City tend to be permanent – while the effects in Shanghai seem to be temporary. On one hand, the inequality being produced in Mexico City tends to be more like the durable inequality theorized by Charles Tilly (1998). By durable inequality, Tilly was referring to those inequalities that last from one social interaction to the next, with special attention to those that persist over whole careers, lifetimes, and organizational histories. With its cumulative effect, the poor households in Mexico City will suffer the effects of inequality permanently, reproducing the same pattern of disadvantage and poverty for generations.
On the other hand, the inequality being produced in Shanghai can be thought of as temporary because migrant populations suffer the effects of inequality while they are located in the city, but this inequality is likely to ameliorate once they go back to their villages. This kind of inequality is different than Tilly’s durable inequality. This being the case, urban inequality in Shanghai could be referred to as a floating inequality. It is known that the inequality gap between urban and rural China is increasingly growing. But it is also likely that the inequality within urban and rural human settlements in China might be lower in the case of the rural settlements. This would mean that, once the migrants get back to their places of origin, they are likely to live in more equitable societies.
This is not to make a philosophical stand in favor of this apparent floating inequality. As of now, I do not have enough pieces of this puzzle to make a sensible judgment. This is only to highlight that both types of inequality are different and that what I am referring to here as floating inequality should be further studied.
Garza, G. (2013) Teoría de las condiciones y los servicios generales de la producción [Theory of the general conditions and services for production]. El Colegio de México.
Glaeser, E. (2011) The triumph of the city: How our greatest invention makes us richer, smarter, greener, healthier and happier. Penguin Press.
Tilly, C. (1998) Durable Inequality. Berkeley and Los Angeles: University of California Press.
 For the Shanghai case see: https://www.aljazeera.com/indepth/features/2012/12/2012122311167503363.html For the Mexico City case see: http://www.businessinsider.com/drone-photography-mexico-city-2016-11