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Does Urbanization Help Poverty Reduction in Rural Areas? Evidence from a Developing Country

  • Nguyen Viet Cuong

Urbanization and poverty have a two-way relationship. Using fixed-effects regression and panel data from household surveys, we estimate the effect of urbanization on income and consumption expenditure of rural households in Vietnam. Then we propose a simple estimate method to estimate the effect of urbanization on rural poverty. It is found that a one percent increase in urbanization leads to a 0.54 percent increase in per capita income and a 0.39 percent increase in per capita expenditure of rural households. In addition, a one percentage point increase in urbanization helps rural households decrease the poverty rate by 0.17 percentage point. However, we find an effect of urbanization on consumption of unhealthy goods: urbanization increases household expenditures on tobacco and wine.

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Paper provided by Department of Research, Ipag Business School in its series Working Papers with number 2014-178.

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Length: 31 pages
Date of creation: 25 Feb 2014
Date of revision:
Handle: RePEc:ipg:wpaper:2014-178
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