Urbanizing with Equity Consideration
Wan, Guanghua; Luo, Zhi; Zhang, Xun | January 2017
Abstract
Research has not yet been undertaken on the optimal level of urbanization, notwithstanding the pioneering work of Au and Henderson (2006) on optimal urban concentration. This paper develops two-sector general equilibrium models of urbanization, with and without equity consideration, respectively. It is shown that considering equity will result in a higher level of urbanization than otherwise, when urban inequality is sufficiently small or migration costs are sufficiently large. Such a theoretical prediction is confirmed by empirical modeling results using panel data from People’s Republic of China (PRC). Provincial governments that paid attention to the inequality issue are found to have higher urbanization levels than those that did not. Finally, we explore possible equity consideration-to-urbanization transmission channels, and empirically establish that equity consideration in PRC (e.g., government initiatives towards combating rural poverty or the urban-rural gap) is positively correlated with road density, which helps reduce migration costs, and with bank lending to the manufacturing sector, which helps enhance the pulling force of migration. Thus, policymakers in the developing world should reverse their prevailing anti-urbanization attitudes and practices that tend to slow down urbanization or restrict rural-to-urban migration.
Citation
Wan, Guanghua; Luo, Zhi; Zhang, Xun. 2017. Urbanizing with Equity Consideration. © Asian Development Bank Institute. http://hdl.handle.net/11540/6781.Keywords
Urban Plans
Urbanism
Urban agriculture
Economic Development
Rural Urban Migration
Cities
Institutional Framework
Business Management
Corporate Restructuring
Urbanization
Urban Services
Urban Projects
Urban Problems
Urban Poverty
Urban Policy
Urban Planning
Urban Infrastructure
Urban Health
Urban Government
Urban Economic Development
Urban Development Finance
Urban Development
Urban Conditions
Urban Communities
Urban Population
Assessing Corporate Governance
Corporate Governance Reform
Governance Models
Local government
Urban renewal
Urban housing
Urban sociology
Transit systems
Rapid transit
Public transit
Mass transit
Personnel management
Corporate reorganizations
Intergovernmental cooperation
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