Stacked affluence: how vertical neighbourhoods shape the segregation of affluence in Brazilian cities

For an upper-middle class household in Latin America, residing in an apartment tower  with good access to jobs, services and amenities seems like a natural choice. In cities with high levels of congestion, low decentralization of jobs, highly concentrated amenities, and few transport alternatives, vertical neighborhoods appear as the demand for access of the more affluent grows.  In fact, many well-to-do neighborhoods in Latin American cities are also vertical neighborhoods.

In recent work on income segregation in Brazilian cities, published in the OECD report Divided Cities: Understanding Intra-Urban Inequalities, I explore whether verticalization bears any relationship with the high observed levels of segregation of the affluent. Preliminary visual evidence for some cities, including Rio de Janeiro, clearly points to a correlation between the percentage of affluent people and the percentage of people residing in apartment towers across neighborhoods.

To test the relationship between concentration in vertical neighborhoods and income segregation, I construct an index of exposure to dwellers in other type of buildings and a measure of segregation of affluence based on an ordinal entropy index. I find that vertical neighborhoods are indeed part of the explanation behind the segregation of the affluent in Brazilian cities, even after controlling for city size, income inequality and other city-level variables. Whether land use regulations have encouraged the surge of vertical neighborhoods concentrating high income households, and how can they be used to ensure affordable housing in central areas in Latin American cities are two interesting questions for future research.

Public transport expansions and informality

The São Paulo Metropolitan Region faces an acute deficit of public transport infrastructure, making commutes long and costly for workers. The difficulty in accessing jobs centers may translate into higher informality rates, since workers may be discouraged to take formal jobs, miss on information about job opportunities, or even be discriminated against according to  their place of residence.

Sé metro station, Corinthians-Itaquera direction. Source: Viatrolebus

In a new working paper co-authored with Frederico R. Ramos, we estimate the impact of public transport expansions on local informality rates. An important part of the explanation for the large deficit in transport infrastructure are chronic project delays. We use this information in our methodological approach to compare areas that received new transport infrastructure with areas where new train/metro stations or bus corridors were planned, but eventually not built.

Example of areas with (left) and without (right) a bus corridor. Source: Google Earth

After controlling for endogenous selection, we find this impact to be significant: informality rates decreased on average 16% faster in areas that received new transport infrastructure, compared to areas that faced project delays.