Cities raise the floor and the ceiling at once. Which effect dominates is decided almost entirely by whether housing supply is allowed to follow demand.
Do cities reduce inequality or concentrate it?
Urbanisation raises average incomes and life expectancy while producing the sharpest spatial inequalities ever recorded. The same density that spreads opportunity prices people out of reach of it.
The tension
The mechanism of urban opportunity — proximity — is exactly what becomes unaffordable.
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Sources behind it
Book
Why Nations Fail
Daron Acemoglu & James A. Robinson · 2012
Places inclusive versus extractive political institutions, rather than geography or culture, at the centre of long-run prosperity.
Book
Development as Freedom
Amartya Sen · 1999
Argues that development should be measured as the expansion of real freedoms people enjoy, not as income growth alone.