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Tech Innovation In Key Markets Can Exacerbate The Gap Between The Rich And The Poor

A recent study has uncovered a correlation between a market's tech innovation and high levels of inequality between the wealthy and the poor in cities across the country.  


The trend, called "innovation intensity," is most prominent in cities like San Francisco, where peopled filed double the number of patents in 2010 that they did in 1990. Prior to this point, the city had been largely middle class. But as innovation grew, so did economic segregation, Fast Company reports.

Research shows the segregation happens in two phases. The first phase is when tech companies move to a city and convert old factories and office space in traditionally lower-income areas. The employees, who often fall into a high-income bracket, move closer to the office, thus creating the initial income gap.

The second phase exacerbates the first issue and is caused when wealthier workers increase demand for amenities such as coffee shops, yoga studios and better schools. These changes ultimately create a rise in rental prices, forcing lower-income residents out of the area and bringing even more high-income residents in.

While the solution to the problem is unclear, researchers suggest improvements to public transit and school systems in lower-income areas could help even the playing field in the future.