Urban sector income distribution and economic development

Abstract

This paper examines the relationship between measures of urban sector inequality and economic development for a sample of 25 developing and newly industrialized countries. A U-shaped relationship is found in which bottom urban quintiles' income shares initially decline and then rise as per capita income increases. This relationship is strengthened when an estimate of urban per capita income replaces national per capita income as the development measure. The curves suggest that per capita incomes of the bottom quintiles will never decline as development proceeds, but may rise only very slowly.