Аннотация
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).
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