Does urbanisation affect rural poverty? Evidence from Indian districts

Massimiliano Calì and Carlo Menon ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Although the high rate of urbanization and the high incidence of rural poverty are two distinct features of many developing countries, we still do not know the effects of the former on the latter. We address this issue by exploring the mechanisms through which urbanization may alleviate rural poverty, disentangling “first round” effects, due to migration of rural poor to cities, and “second round” effects, due to positive externalities of city growth on surrounding rural areas. We test our theoretical predictions on a sample of Indian districts in the period 1981-1999, and find that urbanization has a substantial and systematic poverty reducing effect in surrounding rural areas. This effect is largely attributable to positive spillovers from urbanisation rather than to the movement of the rural poor to urban areas per se. Results using IV estimation suggest that this effect is causal in nature (from urbanisation to rural poverty).

JEL-codes: N0 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2009-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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http://eprints.lse.ac.uk/33205/ Open access version. (application/pdf)

Related works:
Journal Article: Does Urbanization Affect Rural Poverty? Evidence from Indian Districts (2013)
Working Paper: Does urbanization affect rural poverty ? evidence from Indian districts (2013)
Working Paper: Does Urbanisation Affect Rural Poverty? Evidence from Indian Districts (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:33205

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