Does Urbanization Affect Rural Poverty? Evidence from Indian Districts

58 Pages Posted: 20 Apr 2016

See all articles by Massimiliano Calì

Massimiliano Calì

Overseas Development Institute (ODI)

Carlo Menon

affiliation not provided to SSRN

Date Written: January 1, 2013

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.

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

Suggested Citation

Cali, Massimiliano and Menon, Carlo, Does Urbanization Affect Rural Poverty? Evidence from Indian Districts (January 1, 2013). World Bank Policy Research Working Paper No. 6338, Available at SSRN: https://ssrn.com/abstract=2206754

Massimiliano Cali (Contact Author)

Overseas Development Institute (ODI) ( email )

111 Westminster Bridge Road
London
United Kingdom

Carlo Menon

affiliation not provided to SSRN

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