Abstract
This chapter focuses on urban-rural inequality. It begins by examining the seminal works of Simon Kuznets (1955) and Arthur Lewis (1954) as a framework for understanding the rural-urban dimensions of the development process and its relationship with inequality. It then revisits the concepts of urban bias and rural development in the literature and touches upon rural-urban migration against the backdrop of modernisation theories. The chapter finds that empirical evidence around economic growth, development, and inequality is varied and does not lend itself to the inverted U-shaped thesis of growth and inequality. Based on diverse development experiences in the Global South, the chapter argues that rising inequality is not an inevitable part of the development process. The chapter shows that politics and state policies play a fundamental role in shaping the relationship between economic growth and urban-rural inequality.
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Notes
- 1.
Kuznets himself, in his 1955 paper (which was also a presidential address to the American Economic Association), conceded, “The paper is perhaps 5% empirical information and 95% speculation, some of it possibly tainted by wishful thinking” (Kuznets, 1955, p. 26).
- 2.
Lipton’s rural-urban sectoral framework has been critiqued for being both reductionist and, at the same time, very broad and open to fluid interpretation (Harriss & Moore, 1984).
- 3.
Eastwood and Lipton (2000) argue that in developing countries, allocative outcomes and political dispositions are unaffected by price adjustments; rural shares in many sorts of endowments – investment, health, education, and public spending – fall well below both the efficiency and equity optimal. Pro-rural effects of price adjustments are offset by pro-urban policy changes such as location of public investment and schools (Eastwood & Lipton, 2000, p. 2).
- 4.
This paradigm shift, wherein rural development emerged at the forefront of the international development policy agenda, was reflected in the adoption of new political and administrative institutions in the Global South. For instance, in India, in October 1974, the Department of Rural Development came into being within the Ministry of Food and Agriculture. In August 1979, the Department was elevated to the status of a new Ministry under the name Ministry of Rural Reconstruction, and in 1982, it was renamed as the Ministry of Rural Development.
- 5.
For a critique of participatory approaches in development, see Cooke and Kothari (2001).
- 6.
Circular migration is especially hard to define. Even if there is consensus on the definition of circular migration, it is nearly impossible to establish the exact number of circular migrants in a context of high mobility, diverse livelihoods, and multiple spatialities. Closely related, distinguishing between temporary and permanent migration is not always easy, given the many types of in-between mobility (Górny, 2017).
- 7.
Empirical evidence shows that there is no linear transfer of labour as envisaged in dual-sector models of development. Instead, there are several pathways of transition – of workers – from low-productivity sectors to high-productivity sectors, which, in turn, have a bearing on inequality. In other words, the nature of structural transformation matters. In a study of 48 countries for the period 1960–2012, Baymul and Sen (2020) find that the movement of workers from agriculture to manufacturing unambiguously reduced inequality, while movements towards services led to an increase in inequality for developing countries and a decline in inequality for developed countries. Thus, the authors show that manufacturing-driven structural transformation is fundamentally different from services-driven structural transformation. In the former, production tends to be factory-based and in the formal sector, where labour is regulated by minimum wages and other legislations. On the other hand, the services sector in developing countries is characterised by informal economic activities and the lack of an organised working class, which historically, in the context of Western democratic societies had grown in political power. The lack of a political voice and representation of low-income urban working populations limits the scope of inequality reduction in such societies.
- 8.
It may be noted that inequality estimates are based on income data in China and consumption data in India. Usually, in open market developing economies, consumption inequality is lower than income inequality. This needs to be kept in mind while undertaking any comparison of inequality between the two countries.
- 9.
In China’s own development experience, there have been phases of declining inequality, followed by an increase in inequality. See Ravallion and Chen (2021) for details.
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Datta, A. (2023). Urban-Rural Inequality. In: Jodhka, S.S., Rehbein, B. (eds) Global Handbook of Inequality. Springer, Cham. https://doi.org/10.1007/978-3-030-97417-6_102-1
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