Cities are powerful drivers of national economic growth, but stronger economic performance in cities does not automatically deliver broad-based prosperity. Analysis of more than 600 European Union (EU) cities shows that higher productivity and GDP growth are not always associated with lower poverty, reduced inequality or improved access to opportunity. In many large cities, productivity significantly exceeds national averages, while poverty reduction has stalled or reversed over the past decade. The challenge for policymakers is therefore not only to generate growth, but to ensure that it expands opportunity, enabling all residents to contribute to and benefit from it.
Inclusive growth in cities is not only a social objective, but also an economic one. When groups of people face barriers to quality education, employment, housing, mobility or essential services, cities underutilise their workforce and productive potential, ultimately weakening overall productivity and economic output. Across EU OECD countries, childhood disadvantage alone is estimated to cost 3.4% of GDP annually through lost employment, earnings and health outcomes. At the national level, higher inequality can also weigh on long-term growth: a 3-point increase in the Gini coefficient is associated with a 0.35 percentage point reduction in annual GDP per capita growth, leading to substantial cumulative losses over time.
These economic and social costs are particularly acute in cities, where inequalities tend to be spatially concentrated and mutually reinforcing. In cities across the EU, 37 million residents are at risk of poverty or social exclusion. Once housing costs have been taken into account, the share of urban residents at risk of poverty nearly doubles in some cities. Beyond these economic impacts, persistent inequality can erode trust in institutions, deepen territorial divides and undermine the foundations of long-term prosperity.
Inequalities in cities are multidimensional, cumulative and spatially concentrated. Disadvantages in income, employment, health and access to services often overlap within the same neighbourhoods, reinforcing one another over time. For example, a lack of foundational readiness when starting school – such as gaps in cognitive, social and emotional skills – predicts poor grades, which limits access to good jobs and in turn constrains the local tax base and public services available for the next generation. Across the European Union, nearly one in three residents in large and mid-sized cities cannot reach public transport within a ten-minute walk and around one in four lack access to a green space, limiting access to jobs, services and quality of life. These gaps disproportionately affect some groups, such as young people, low-income households and people with a migrant background, translating into unequal life chances within the same city.
Structural characteristics of cities – size, demographic trends and economic specialisation – determine their specific inclusive growth challenges. Analysis shows that large, service-oriented cities often combine strong growth with persistent inequality, polarised labour markets and housing pressures. By contrast, smaller, shrinking or industrial cities frequently face weaker growth and lower labour market participation, which can constrain opportunities for residents and reduce resilience to economic shocks. Demographic dynamics also matter: growing cities often attract higher-skilled workers and stronger investment, but such dynamics can trigger rapid rises in housing costs.
Against this backdrop, this report explored the five policy pillars of the OECD Inclusive Growth in Cities framework – education, labour market, housing and the built environment, infrastructure and public services, and fair climate action. Evidence showed that in many cities, action across these pillars delivered measurable improvements in economic and social outcomes. In Barcelona, Spain, for example, a school desegregation programme narrowed the educational achievement gap by nearly three points for disadvantaged students in standardised tests. In Tromsø, Norway, a six‑month language introduction programme helped 70% of refugees into employment within six months. In Portugal, Lisbon’s Housing First programme achieved a 90% housing sustainment rate, i.e. participants remained stably housed over time, while halving substance use, showcasing a positive impact of integrated, people-centred approaches. In Madrid, Spain, the youth transport pass increased the probability of finding employment after job loss by 23 percentage points. In Milan, Italy, the Low Emission Zone is predicted to cut air-pollution related mortality by approximately 50% by 2030, gains that disproportionately benefit vulnerable groups. This report brings together a wealth of such evidence from OECD and EU cities illustrating what works in practice to foster more inclusive urban growth.
Although interventions vary across cities, effective approaches share a set of common characteristics. They shift from departmental silos towards cross-sectoral policy action, combining people- and place-based approaches. The most impactful local interventions also move away from short-term crisis responses towards sustained, preventative frameworks that blend physical (“hard”) infrastructure with social (“soft”) interventions, with an explicit focus on high-risk life-course transitions.
Moreover, local interventions are more effective at addressing overlapping disadvantages when they derive from a shared long-term vision tackling the root causes of urban inequality. Successful examples include Düsseldorf’s Zukunft Quartier, Germany, which promotes neighbourhood regeneration through participatory planning, or in Romania, Cluj-Napoca’s Housing First-driven desegregation, which combines investment in housing development and skills training with health and educational support for Roma communities. Similarly, Stockholm’s Fokus Järva initiative, Sweden, integrates large-scale housing renewal and public space improvements with local job programmes and targeted school investments.
Despite growing recognition of the importance of driving inclusive growth in cities, implementation gaps remain. While 77% of cities in the OECD/EC survey report prioritising inclusive education, followed by 75% that prioritise reducing inequality and fostering inclusion, around 60% still implement inclusive growth along departmental silos, where economic development and inequalities are typically addressed through distinct structures. Cities also report persistent challenges in aligning stakeholders around a shared vision, securing financing and funding, accessing granular data and building technical capacity.
To help address these challenges, the report highlights seven enabling factors that underpin effective approaches: i) embedding inclusive growth objectives into long-term economic and spatial strategies that align priorities across levels of government; ii) incorporating structured participatory design; iii) strengthening granular data systems disaggregated at the neighbourhood level to improve targeting, monitoring and policy impact; iv) mobilising sustainable financing and funding, including pooled funding across levels of government where appropriate; v) building dedicated teams focused on fostering inclusive growth in close partnership with local communities; vi) monitoring, evaluation and adaptation grounded in timely indicators with feedback loops to improve outcomes and refocus action over time; and vii) sustaining political support over time through clear communication of results.
Building on these findings, the report proposes a five-stage Roadmap for Inclusive Growth in Cities to support implementation of inclusive growth ambitions across different city contexts:
1. Diagnose: Identify who and which places are being left behind through a robust evidence base. This involves situating the city within its broader economic and demographic context, identifying spatial disparities and mapping overlapping opportunity gaps across neighbourhoods and population groups. Particular attention should be given to the cumulative nature of disadvantage in cities where barriers such as low educational attainment, poor health, weak labour demand and inadequate housing reinforce one another and limit both individual opportunity and local economic potential.
2. Prioritise: Focus on the opportunity gaps that matter most for both inclusion and economic performance. Rather than attempting to address all challenges simultaneously, cities should identify a limited number of strategic priorities where action can have the greatest impact to expand access to jobs, services and opportunities. This requires balancing long-term strategic goals with short-term visible improvements, while being explicit about trade-offs and recognising that different groups and places may benefit differently from growth.
3. Mobilise: Design integrated initiatives to tackle the root causes of barriers to opportunity. Inclusive growth challenges rarely fall in a single policy domain. Cities should therefore align education, labour market, housing, transport and climate interventions around shared objectives for specific places and population groups. Mobilisation is about engaging and aligning different levels of government and city departments, various stakeholders and funding streams so that subsequent actions reinforce one another to unlock access to opportunities in cities.
4. Implement: Translate inclusive growth strategies into action by launching early initiatives that demonstrate progress. Strong delivery arrangements, continued co-ordination across departments, clear communication with partners, and regular reporting on progress help maintain stakeholder trust, sustain momentum and ensure successful implementation.
5. Monitor, learn and adapt: Track outcomes across people and places, using indicators capturing both economic performance and inclusion outcomes, as policies may produce uneven or unintended spatial effects over time. Cities can use this evidence to refine interventions based on evidence, and scale effective approaches by embedding them into long-term city planning and budgeting frameworks.