Urban Concentration and Poverty in Developing Countries

We investigate the impacts of urban concentration (share of the population living in large cities) on poverty in developing countries. We use instrumental variables to estimate a system linking urban concentration, growth and urban and rural poverty. The results show that the importance of the population living in (small) cities (less than 0.5 million inhabitants) or very large cities (beyond 5 million inhabitants) has no impact on poverty. The importance of cities of 1 to 5 million inhabitants is poverty reducing. We conclude that developing countries with a large share of the population living in very big cities could reduce poverty by deconcentrating their urbanization toward cities of between 1 and 5 million inhabitants.SCOPUS: ar.j