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Urban growth and uninsured rural risk: Booming towns in bust times

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  • Poelhekke, Steven

Abstract

Rapid urbanization also happens when economic growth and urban job creation are absent, such as in Africa and Latin America during the eighties. Why do some countries urbanize faster while having worse economic growth? This paper finds that higher aggregate agricultural risk induces rural-urban migration, providing an additional channel to explain the urbanization trend. Uninsurable expected risk will lead to rural-urban migration as a form of ex-ante insurance if households are liquidity constrained and cannot overcome adverse shocks. The effect is robust to controlling for the traditional view of urbanization driven by industrialization, and to several alternative explanations such as government spending.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 96 (2011)
Issue (Month): 2 (November)
Pages: 461-475

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Handle: RePEc:eee:deveco:v:96:y:2011:i:2:p:461-475

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Urbanization Risk Natural resources Volatility Rural-urban migration;

References

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Cited by:
  1. , Thanyaporn, 2012. "The Effects of Rural Land Right Security on Labour Structural Transformation and Urbanization: Evidence from Thailand," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  2. Sanghamitra Bandyopadhyay & Elliott Green, 2013. "Urbanization and Mortality Decline," Working Papers 46, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.

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