Research Series Issue 27 - Asia’s rural-urban disparity in the context of growing inequality

Based on the available cross-country data for Asia, this paper uses the available cross-country data to analyse the causes for the increase in the disparity between rural and urban areas in Asia.

The determinants of rural inequality and rural-to-urban migration are examined by answering to the following research questions: does agricultural or non-agricultural growth contribute to the income gap between agricultural and non-agricultural sectors? Does agricultural growth or non-agricultural growth affect the Gini coefficient in rural areas?

Findings show that the rural urban disparity in GDP per capita characterizes overall inequality at national levels, even though income gap reduced in many countries (India, Vietnam and Thailand) due to the narrowing of the rural –urban wage gap in recent years.

Furthermore, results suggest that a higher non-agricultural growth rate tends to widen the rural- urban gap over time while agricultural growth is unrelated to this phenomenon.