Urbanization and Inequality/Poverty

Abstract

The level of world urbanization has crossed the 50% mark, and nearly all future population growth is projected to occur in cities. Cities are disproportionately wealthy, but are associated with poverty, too. Addressing the dual challenges of urbanization and poverty is key to achieving sustainable development. This paper performs cross-sectional regressions, based on Kuznets, as a starting point for understanding the relationship between urbanization and poverty/inequality indicators. Increases in gross domestic product per capita unambiguously lowered poverty and narrowed rural-urban gaps. By contrast, levels of urbanization were either unrelated to poverty/inequality indicators and measures of rural-urban gaps, or had a nonlinear effect where, initially, increases in urbanization likewise led to improvements in those areas, while at higher levels of urbanization, increases in urbanization exacerbated poverty and rural-urban gaps.