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Does urbanization affect rural poverty ? evidence from Indian districts

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  • Cali, Massimiliano
  • Menon, Carlo

Abstract

Although a high rate of urbanization and a high incidence of rural poverty are two distinct features of many developing countries, there is little knowledge of the effects of the former on the latter. Using a large sample of Indian districts from the 1983-1999 period, the authors find that urbanization has a substantial and systematic poverty-reducing effect in the surrounding rural areas. The results obtained through an instrumental variable estimation suggest that this effect is causal in nature and is largely attributable to the positive spillovers of urbanization on the rural economy rather than to the movement of the rural poor to urban areas. This rural poverty-reducing effect of urbanization is primarily explained by increased demand for local agricultural products and, to a lesser extent, by urban-rural remittances, the rural land/population ratio, and rural nonfarm employment.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6338.

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Date of creation: 01 Jan 2013
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Handle: RePEc:wbk:wbrwps:6338

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Keywords: Rural Poverty Reduction; Population Policies; Regional Economic Development; Achieving Shared Growth;

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Citations

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Cited by:
  1. Luc Christiaensen & Joachim Weerdt & Yasuyuki Todo, 2013. "Urbanization and poverty reduction: the role of rural diversification and secondary towns," Agricultural Economics, International Association of Agricultural Economists, vol. 44(4-5), pages 435-447, 07.
  2. Katsushi S. Imai & Raghav Gaiha & Alessandra Garbero, 2014. "Poverty Reduction during the Rural-Urban Transformation: Rural Development is still more important than Urbanisation?," Brooks World Poverty Institute Working Paper Series 20414, BWPI, The University of Manchester.
  3. Christiaensen, Luc & Todo, Yasuyuki, 2013. "Poverty reduction during the rural-urban transformation : the role of the missing middle," Policy Research Working Paper Series 6445, The World Bank.
  4. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2012. "Is India's Manufacturing Sector Moving Away From Cities?," NBER Working Papers 17992, National Bureau of Economic Research, Inc.
  5. S. Chandrasekhar & Mousumi Das & Ajay Sharma, 2014. "Short-term migration and consumption expenditure of households in rural India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-009, Indira Gandhi Institute of Development Research, Mumbai, India.
  6. S. Chandrasekhar & Mousumi Das & Ajay Sharma, 2014. "Short-term Migration and Consumption Expenditure of Households in Rural India," Working Papers id:5788, eSocialSciences.
  7. Nguyen Viet Cuong, 2014. "Does Urbanization Help Poverty Reduction in Rural Areas? Evidence from a Developing Country," Working Papers 2014-178, Department of Research, Ipag Business School.

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