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Does urbanisation affect rural poverty? Evidence from Indian districts

Cali, Massimiliano and Menon, Carlo (2009) Does urbanisation affect rural poverty? Evidence from Indian districts. SERC Discussion Papers, SERCDP0014. Spatial Economics Research Centre (SERC), London School of Economics and Political Science, London, UK.

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Abstract

Although the high rate of urbanization and the high incidence of rural poverty are two distinct features of many developing countries, we still do not know the effects of the former on the latter. We address this issue by exploring the mechanisms through which urbanization may alleviate rural poverty, disentangling “first round” effects, due to migration of rural poor to cities, and “second round” effects, due to positive externalities of city growth on surrounding rural areas. We test our theoretical predictions on a sample of Indian districts in the period 1981-1999, and find that urbanization has a substantial and systematic poverty reducing effect in surrounding rural areas. This effect is largely attributable to positive spillovers from urbanisation rather than to the movement of the rural poor to urban areas per se. Results using IV estimation suggest that this effect is causal in nature (from urbanisation to rural poverty).

Item Type: Monograph (Discussion Paper)
Official URL: http://www.spatialeconomics.ac.uk/SERC/publication...
Additional Information: © 2009 Massimiliano Cali and Carlo Menon
Library of Congress subject classification: G Geography. Anthropology. Recreation > G Geography (General)
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HN Social history and conditions. Social problems. Social reform
Sets: Research centres and groups > Spatial Economics Research Centre
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: SERCDP0014
Date Deposited: 24 Mar 2011 10:28
URL: http://eprints.lse.ac.uk/33205/

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