Where There was Smoke, There is Water: Canals as Indicator of Urban Income Inequality

In this empirical paper, we propose the following hypothesis: the fate of large metropolises – especially the dynamics of the inhabitants’ income disparity between their core and periphery – may still be significantly influenced by their industrial past. Starting from the first industrial revolution, we argue that the establishment of heavy and polluting industries in the centres of these metropolises has had lasting effects on income levels and the socio-economic landscape of these neighbourhoods, often persisting for decades after these industries close. In the absence of data on the location of past factories, this study proposes using the presence or absence of a canal close to the city centre as a proxy for a significant industrial legacy. We show that such a proxy predicts the concentration of inhabitants by income level in the core vs. periphery, as evidenced by OECD and US-BEA income-per-head data. One of the key results of this paper is that an industrial past (located around a canal) amounts to a potent negative urban amenity.