IFAD RESEARCH SERIES 42 What drives rural youth welfare? The role of spatial, economic, and household factors

Most of the discourse on rural youth in developing countries lacks robust evidence on where rural youth live and how the challenges and opportunities of their location affect their welfare outcomes. This paper uses the concept of the Rural Opportunity Space from economic geography literature to shed light on these questions. Rural opportunities are expected to be shaped by commercial and agricultural potential of a location. We apply this conceptual framework to global geo-spatial data from 85 low- and middle-income countries on population density, as a proxy for commercial potential, and a measure of greenness, as a proxy for agricultural potential, to locate rural youth within the opportunity space globally. We then combine these data with household-level data from 12 countries in Africa, Latin America and Asia, to assess how the Rural Opportunity Space influences welfare outcomes of young households compared with older households. Our findings show that most rural youth actually live in areas with high potential in terms of commercial and agricultural opportunities. However, their welfare outcomes depend much more strongly on commercial potential than on agricultural potential. Education can have large poverty-reducing effects for younger households, especially in areas where commercialization potential is neither lowest nor highest.