The debate on inequality and social divisions in Western cities has been do
minated by three positions-the polarization thesis, the 'skills mismatch' t
hesis and a specific European approach emphasizing the significance of welf
are state structures. These three positions are examined with data from Osl
o, Norway. It is shown that although income inequality has increased, there
is no consistent pattern of social divisions. The evidence provides suppor
t both for the polarization and the mismatch thesis, dependent on the unit
of analysis and the group in question. It is difficult to spot influences o
f the welfare state in these data, and it is argued that rising inequality,
contrary to service provision, poverty and segregation, approaches a 'clos
ed process'. Increased earnings at the very top, however, may be explained
in terms of social networks.