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Urbanization and the Poverty Level

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Abstract

This paper analyzes the effect of urbanization on the poverty level. Our theoretical model suggests a U-shape relationship between the level of urbanization and poverty. Urbanization contributes to poverty reduction but at much higher levels, urbanization leads to increases in poverty. Empirically, we estimate the “optimal level” of urbanization by using: (i) an instrumental variable approach in the framework of the generalized method of moments and (ii) a dynamic panel analysis approach. We also investigate the robustness of the impact of urbanization on the poverty level by examining a variety of linkages. The empirical analysis covers different regions of the world to study whether the magnitude of the urbanization effects varies across regions. Our results support the hypothesis that there exists a U-shape relationship between the level of urbanization and the poverty level.

Suggested Citation

  • Jorge Martinez-Vazquez & Panupong Panudulkitti & Andrey Timofeev, 2009. "Urbanization and the Poverty Level," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0914, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper0914
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    File URL: http://icepp.gsu.edu/files/2017/10/ispwp0914.pdf
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    Cited by:

    1. Xingying Wang & Hongli Yan & Libin E & Xiaoyun Huang & Haizhen Wen & Yan Chen, 2022. "The Impact of Foreign Trade and Urbanization on Poverty Reduction: Empirical Evidence from China," Sustainability, MDPI, vol. 14(3), pages 1-20, January.
    2. Dhrifi, Abdelhafidh & Jaziri, Raouf & Alnahdi, Saleh, 2020. "Does foreign direct investment and environmental degradation matter for poverty? Evidence from developing countries," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 13-21.
    3. Nguyen, Cuong, 2012. "Does Urbanization Help Poverty Reduction in Rural Areas?Evidence from a Developing Country," MPRA Paper 48660, University Library of Munich, Germany.
    4. Arouri, Mohamed & Ben Youssef, Adel & Nguyen, Cuong, 2017. "Does urbanization reduce rural poverty? Evidence from Vietnam," Economic Modelling, Elsevier, vol. 60(C), pages 253-270.
    5. Siburian, Matondang Elsa, 2022. "The link between fiscal decentralization and poverty – Evidence from Indonesia," Journal of Asian Economics, Elsevier, vol. 81(C).
    6. Nguyen, Cuong, 2012. "Does Urbanization Help Poverty Reduction in Rural Areas?Evidence from a Developing Country," MPRA Paper 48660, University Library of Munich, Germany.

    More about this item

    Keywords

    urbanization; public infrastructure; poverty reduction; pro-poor growth;
    All these keywords.

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