Does Urbanization Reduce Rural Poverty? Evidence from Vietnam

This paper contributes to the urbanization-poverty nexus by assessing the effect of urbanization on income, expenditure, and poverty in rural households in Vietnam, using data from household surveys. We find that the urbanization process stimulates the transition from farm to non-farm activities in rural areas. More specifically, urbanization tends to reduce farm income and increase wages and non-farm income in rural households. This suggests that total income and consumption expenditure of rural households are more likely to increase with urbanization. Finally, we find also that urbanization helps to decrease the expenditure poverty rate of rural households, albeit by a small magnitude.