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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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  • Cali, Massimiliano & Menon, Carlo, 2013. "Does urbanization affect rural poverty ? evidence from Indian districts," Policy Research Working Paper Series 6338, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6338
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    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. Vandercasteelen, Joachim & Beyene, Seneshaw Tamru & Minten, Bart & Swinnen, Johan, 2018. "Cities and agricultural transformation in Africa: Evidence from Ethiopia," World Development, Elsevier, vol. 105(C), pages 383-399.
    6. S. Chandrasekhar & Mousumi Das & Ajay Sharma, 2015. "Short-term Migration and Consumption Expenditure of Households in Rural India," Oxford Development Studies, Taylor & Francis Journals, vol. 43(1), pages 105-122, March.
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    8. 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, July.
    9. Christiaensen, Luc & Todo, Yasuyuki, 2014. "Poverty Reduction During the Rural–Urban Transformation – The Role of the Missing Middle," World Development, Elsevier, vol. 63(C), pages 43-58.
    10. Juan Mauricio Ramírez & Yadira Díaz & Juan Guillermo Bedoya, 2014. "Decentralization in Colombia: searching for social equity in a bumpy economic geography," Working Papers Series. Documentos de Trabajo 011557, Fedesarrollo.
    11. Koshy, Abraham & Narayanan, Priya, 2017. "A Study of the Evolution of Nature and Narration of Brands in an Emerging Market," IIMA Working Papers WP 2017-05-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    12. Linguère Mously Mbaye & Alassane Drabo, 2017. "Natural Disasters and Poverty Reduction: Do Remittances Matter?," CESifo Economic Studies, CESifo, vol. 63(4), pages 481-499.
    13. Juan Mauricio Ramírez & Juan Guillermo Bedoya & Yadira Díaz, 2016. "Geografía económica, descentralización y pobreza multidimensional en Colombia," Cuadernos de Fedesarrollo 014443, Fedesarrollo.
    14. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2012. "Is India’s Manufacturing Sector Moving Away From Cities?," Harvard Business School Working Papers 12-090, Harvard Business School.
    15. Higashikata, Takayuki & Hashiguchi, Yoshihiro, 2017. "The causal effect of urbanization on rural poverty reduction: quasi-experimental evidence using Indonesian urban area data," IDE Discussion Papers 673, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    16. Das, Samarjit & Ghate, Chetan & Robertson, Peter E., 2015. "Remoteness, Urbanization, and India’s Unbalanced Growth," World Development, Elsevier, vol. 66(C), pages 572-587.
    17. Nguyen, Cuong, 2012. "Does Urbanization Help Poverty Reduction in Rural Areas?Evidence from a Developing Country," MPRA Paper 48660, University Library of Munich, Germany.
    18. Imai, K.S. & Gaiha, R. & Garbero, A., 2018. "IFAD RESEARCH SERIES 22 - Poverty reduction during the rural-urban transformation: rural development is still more important than urbanization," IFAD Research Series 280071, International Fund for Agricultural Development (IFAD).
    19. Srivastava, Govind & Kathuria, Vinish, 2014. "Utility reforms in developing countries: Learning from the experiences of Delhi," Utilities Policy, Elsevier, vol. 29(C), pages 1-16.
    20. Imai, Katsushi S. & Gaiha, Raghav & Garbero, Alessandra, 2017. "Poverty reduction during the rural–urban transformation: Rural development is still more important than urbanisation," Journal of Policy Modeling, Elsevier, vol. 39(6), pages 963-982.
    21. Vandercasteelen, Joachim & Beyene, Seneshaw Tambru & Minten, Bart & Swinnen, Johan, 2018. "Big cities, small towns, and poor farmers: Evidence from Ethiopia," World Development, Elsevier, vol. 106(C), pages 393-406.
    22. Ping Gao & Shenghe Liu & Wei Qi & Honggang Qi, 2020. "The Nexus between Poverty and the Environment: A Case Study of Lijiang, China," Sustainability, MDPI, Open Access Journal, vol. 12(3), pages 1-17, February.
    23. Lanjouw, P. & Marra, M.R., 2018. "Urban poverty across the spectrum of Vietnam’s towns and cities," World Development, Elsevier, vol. 110(C), pages 295-306.
    24. Juan Mauricio Ramírez & Juan Guillermo Bedoya & Yadira Díaz, 2014. "Convergencia social en Colombia: el rol de la geografía económica y de la descentralización," Informes de Investigación 012499, Fedesarrollo.
    25. Braja Bandhu Swain & Nils Teufel, 2017. "The impact of urbanisation on crop–livestock farming system: a comparative case study of India and Bangladesh," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 19(1), pages 161-180, April.

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    Keywords

    Rural Poverty Reduction; Population Policies; Regional Economic Development; Achieving Shared Growth;
    All these keywords.

    JEL classification:

    • N0 - Economic History - - General

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