IMPACT OF URBAN SECTOR ON POVERTY AND INCOME INEQUALITY IN SRI LANKA

N.P. Ravindra Deyshappriya(1),
(1) Faculty of Management, Uva Wellassa University of Sri Lanka, Badulla. 90000, Indonesia

Abstract


Sri Lanka has been one of the countries in the region with faster expansion of urban areas. However, less attention has been paid on the rapid expansion of Sri Lanka’s urban areas and its impacts on poverty and income inequality in Sri Lanka. Hence, the objective of the current study is to examine the impacts of urban sector on poverty and income inequality in Sri Lanka. The study applied probit and ordered probit models and calculations of growth elasticity of poverty along with appropriate descriptive statistics. The analysis is mainly based on the data from Household Income & Expenditure Survey (2012/13) conducted by the Department of Census and Statistics of Sri Lanka. The findings suggest that the being an urban sector household significantly reduces poverty. More specifically, the probabilities of being extreme poor, poor and vulnerable non-poor for a household in the urban sector are lower by 0.2%, 3.4% and 8.1% respectively, compared to the estate sector. Similarly, the probability of being non-poor for a household in urban areas is higher by 11.63%, compared to the estate sector. Furthermore, the urban sector has the highest Growth Elasticity of Poverty (-0.31) which reflects that the rate at which growth translates into poverty reduction is highest in urban sector compared to other sectors. Apart from that, expenditure-based and income-based Gini coefficients for the urban sector are 0.4 and 0.51 respectively, and both are higher than that of the national and provincial averages of the Gini index. Moreover, the poorest decile of the urban sector owns only 0.5% of the total urban sector income while the richest decile accounts for 55.8% of the total household income of the urban sector. The study has empirically confirmed that, despite urban sector has the lowest probability of being poor, urban sector and urbanization significantly increase inequality. Therefore, the study recommends having a well-planned urban sector that promotes more equal distribution of resources as well

Full Text:

 Subscribers Only

References


Aitchison, J. & Silvey, S.D. (1957). The generalization of probit analysis to the case of multiple responses. Biometrika, 44(1/2), 131-140.

Chen, G., Glasmeier, A.K., Zhang, M., & Shao, Y. (2016). Urbanization and income inequality in postreform China: A Causal Analysis Based on Time Series Data. PloS one, 11(7), e0158826.

Department of Census and Statistics of Sri Lanka. (2012/13). Household Income and Expenditure Survey.

Ellis, P., & Roberts, M. (2015). Leveraging urbanization in South Asia: Managing spatial transformation for prosperity and livability. World Bank.

Ferreira, F. H. (1999). Inequality and economic performance. A brief overview to theories of growth and distribution. World Bank.

Gunewardena, D., Meedeniya, A. & Shivakumaran, S. (2007). Absolute and relative consumption povertyin Sri Lanka. Working Paper Series. No. 16 – 2007. Centre for Poverty Analysis.

Jayathilaka, R., Selvanathan, S., & Bandaralage, J. S. (2015). Is there a link between alcohol consumption and the level of poverty? Applied Economics, 48(22), 2054-2063.

Kanbur, R. & Zhuang, J. (2013). Urbanization and inequality in Asia. Asian Development Review, Vol. 30(1), pp. 131-147.

Mathur, O.P. (2014). Urban Poverty in Asia. Asian Development Bank.

Nanayakkara, W. (2017). Status of Poverty in Sri Lanka Based on Different Poverty Lines. Institute ofPolicy Studies, Sri Lanka.

Tacoli, C., McGranahan, G. & Satterthwaite, D. (2015). Urbanisation, Rural-Urban Migration and Urban Poverty. Human Settlements Group. International Institute for Environment and Development.

World Bank. (2015). Sri Lanka: Poverty and Welfare. Recent Progress and Remaining Challenges. World Bank.

Zhang, Xiaobo, Jin Yang & Wang, W. (2010). The People’s Republic of China has reached the Lewis Turning Point. IFPRI Discussion Paper No. 000977.

Zhang, Y. (2016). Urbanization, Inequality, and Poverty in the People's Republic of China. ADBI Working




DOI: https://doi.org/10.33369/ajps.v5i1.9241

Article Metrics

 Abstract Views : 0 times
 PDF Downloaded : 0 times

Refbacks

  • There are currently no refbacks.


Asian Journal for Poverty Studies (AJPS) indexed by:

      

RENPER Country Representative Office, University of Bengkulu

Jl. WR. Supratman, Kandang Limun
City of Bengkulu, Bengkulu, Indonesia 38121
Phone : +62-736-21170, +62-736-26793
Fax : +62-736-22105, +62-736-26793
Email : ajps@unib.ac.id
Web : renper.unib.ac.id

 

 

 

View My Stats