The Rural-Urban Divide

Why incomes, services and opportunities differ between cities and the countryside, and how the divide shapes development and politics.

In most countries, people in cities earn more on average than people in rural areas. This rural-urban divide is one of the most persistent economic patterns in the world.

Why cities earn more

Productivity: cities concentrate firms, workers and ideas, making work more productive.
Types of jobs: cities have more jobs in industry and services, which usually pay more than farming.
Education: city residents tend to have more schooling, and educated people move to cities.
Access to markets and infrastructure.

Services gaps

Rural areas often have weaker access to:

Hospitals and specialist doctors.
Good schools and colleges.
Banking, internet and transport.
Services for disabled people, including assistive technology and rehabilitation.

Structural transformation

As countries develop, workers move from agriculture to industry and services, and from villages to cities. This structural transformation has been central to rising incomes in countries like China and South Korea. India’s urbanisation has been slower; the 2011 census found around 31 percent of Indians lived in urban areas, though many areas classified as rural have urban characteristics.

Is the gap real?

Economists debate how much of the rural-urban income gap reflects real differences in productivity versus differences in who lives where. Research by economists including Alwyn Young and Joan Hamory Hicks suggests a substantial part of the gap reflects the types of workers who live in cities. But studies also find genuine gains from moving to cities. Living costs are also higher in cities, reducing the real gap.

Politics

The rural-urban divide increasingly shapes politics in many countries, with rural and urban voters often supporting different parties and priorities.

A seasonal migrant

A young man from a village in Bihar works in construction in Delhi for several months a year, earning much more than he could on the family farm. He sends money home and returns for the harvest. His experience shows both the pull of higher urban wages and the ties that keep many migrants linked to rural areas.

Thinking rural areas are only about farming

Many rural people work in non-farm jobs, such as construction, small businesses, transport and services. Rural economies are more diverse than farming alone.

Key takeaways

People in cities usually earn more than rural residents.
Productivity, job types, education and infrastructure drive the gap.
Rural areas often lack good health, education and financial services.
Structural transformation moves workers from farms to cities as countries develop.