# **3.2 Relative Urban Growth**

We now investigate the effects of urban natural increase and residual migration on the change in urbanization, a measure of relative urban growth. We run the following panel model for the same 35 countries and _t_ = [1960s, 1970s, 1980s, 1990s, 2000s]: where ∆ _Uc_ , _t_ is the change in the urbanization rate (in percentage points) of country _c_ in decade _t_ . Our variables of interest are the urban rate of natural increase ( _Unic_ , _t_ ) and the residual migration ( _Migc_ , _t_ ) of country _c_ in decade _t_ (%). All regressions include country and decade fixed effects ( _θc_ ; _λt_ ) and aforementioned controls (Results in Table 2).<sup>20</sup> Including region fixed effects and rural natural increase (row (3)), a one percentage point increase in the effect of urban natural increase is associated with a 1.63 increase in the change in the urbanization rate ( _Ut − Ut−_ 1) (the coefficient of residual migration is 2.06). Unlike urban growth, urbanization rates are directly affected by rural natural increase, since rural newborns immediately expand the rural population. As urban and rural natural increase are positively correlated, not including rural natural increase leads to a downward bias when estimating the effect of urban natural increase (rows (1)-(2)). The long-term effect then ranges from 1.21 (ADL, row (4)) to 1.66-1.78 (cross-sections in 1960-2010, rows (5)-(6)), while for migration, the range is 1.62-3.28. The effects are not significantly different from the short-term effects (row (3)). The ADL effect is then not significantly different for urban natural increase, but the point estimate remains high. Results also hold if we use the 97 countries for which we have data on natural increase in 2000 (rows (7)-(8)).

These effects are strong, though not necessarily causal. Assuming average long-term effects of about 2.45 ((1.62+3.28)/2) and 1.50 ((1.21+1.78)/2) for migration and urban natural increase, respectively, one standard deviation increases in migration and urban natural increase are respectively associated with a 0.70 and a 0.30 standard deviation increase in the change in urbanization. Migration is the main component of urbanization. Indeed, a migrant decreases the rural population by one and increases the urban population by one. Urban natural increase only increases the urban population, hence the fact that it has a relatively larger effect on urban growth than on urbanization. But it is nonetheless a significant factor in urbanization. For example, Europe’s urbanization rate rose by 2.5 percentage points every ten years during the 1800-1910 period, increasing from 15% in 1800 to 40% in 1910. Africa and Asia realized the same performance in half the time, between 1960 and 2010; the decadal change was 4.5 percentage points in Africa and Asia post-1960. On average, urban natural

> 20We cannot control for urbanization rates at the start of the decade, as the dependent variable – the change in the urbanization rate – is linearly defined. Results hold if we control for urbanization rates in 1960 interacted with decade fixed effects, to control for convergence in urbanization (Web Appx. Table 11).

10