Asia's Rural-urban Disparity in the Context of Growing Inequality

This study offers empirical evidence on the rural-urban gap in the context of growing inequality in Asia. First, China and India explain the trends of regional inequality given their large population, signifying their importance as major contributors. Overall, China’s income inequality is characterised by rural-urban disparity, but the inequality within-rural and/or within urban areas has worsened, although it experienced very high economic growth. India is mainly characterised by high inequality within urban areas despite a sharp reduction in urban poverty. Rural-urban income gap has narrowed in recent years. We also find that the rural and urban income gap has narrowed in many countries, such as, India, Vietnam and Thailand. Second, our econometric results on the agricultural and non-agricultural income gap suggest that higher non-agricultural growth rate tends to widen the urban-rural gap over time, while agricultural growth is unrelated to the rural-urban gap. Third, the rural-urban human resources gaps in terms of educational attainment have increased in both India and China. Fourth, remittances are likely to reduce poverty in many countries. Policies which would promote agricultural growth and rural education are deemed important not only for reducing rural poverty, but also for narrowing the rural-urban gap of human resources.