surveys, from 2000 to 2009 for 73 low- and middle-income countries. That analysis reported that 58% of the total population and 78% of the extreme poor lived in the rural sector, as compared to 55% and 80%, respectively, in our sample. The slightly lower share of the total population living in rural areas in this analysis likely reflects increased urbanization in recent years, as this paper draws on newer household surveys and lines up the sample to 2013 instead of 2010. Although the two studies are not directly comparable, the higher share of the extreme poor in rural areas in the more recent data is suggestive that the rural sector has lagged in reducing poverty since 2010.<sup>22</sup> As mentioned above, the extent of poverty in rural areas is subject to two countervailing biases **.** On the one hand, the failure to spatially deflate the welfare aggregate in several countries overestimates the extent of rural poverty, by not adjusting for the lower cost of living in rural areas. On the other hand, the use of outdated urban/rural definitions in national surveys understates rural poverty by continuing to classify newly urbanized suburbs, which tend to be less poor than more remote areas, as rural. The former is mitigated by the use of separate urban and rural PPP exchange rates in China, India, and Indonesia. This, combined with evidence from South Asia presented below, suggests mild effects on the overall share of rural poor of less than five percentage points. It is not possible to assess the magnitude of the second source of bias with the data at hand.<sup>23</sup> In line with the high rate of rural poverty, however, poverty is also deeply ingrained in the agriculture sector **.** Nearly two-thirds of extremely poor workers aged 15 and above reported that their primary job is in the agricultural sector; and extreme poverty rates among these workers is more than four times higher than among non-agricultural workers (Figures 5 and 6).<sup>24</sup> The significant gap in poverty rates between the agriculture and non-agriculture sectors is consistent with the well-documented earnings penalty faced by agriculture labor.<sup>25</sup> While the proportions of the extreme poor and moderate poor living in rural areas are roughly similar (80.1% vs. 76.0%, or a 4.1 percentage point difference), the moderate poor are much less likely than the extreme poor to work in the agriculture sector (64.7 vs. 52.0 percent, a 12.7 percentage point difference). This is consistent with growth in non-agricultural employment facilitating movement from extreme to moderate poverty.

Non-agriculture employment, however, is far from sufficient to escape poverty. Of the extremely poor workers in rural areas, nearly 24 percent work in non-agriculture jobs, and just under 40 percent of moderately poor workers in rural areas work outside of agriculture (Figure 7). This suggests further analysis to better understand why these non-agricultural workers in rural areas remain poor, and whether either facilitating migration to urban areas or greater investment in infrastructure would raise their productivity. Further analysis of the GMD, for example, can

> 22 Future work analysis will examine trends in the poverty profile using a comparable sample of countries. 23 An additional source of bias, if the population of interest is the entire developing world, results from the nonrandom selection of countries into the sample. In general, results can be interpreted as representing the 89 sample countries, which as noted above represent 86.5 percent of the developing world population.

> 24 The total poverty rate in Figure 6 is lower by 2.4 percentage points than in Figure 4. This is primarily due to the smaller number of surveys for which the variable on the sector of work is available.

> 25 A longstanding literature documents the central role of low returns to agriculture in development (Lewis (1954), Harris and Todaro (1970)). Alvarez-Cuadrado and Poshke (2012) and Gindling and Newhouse (2014) provide more recent empirical evidence on the earnings penalties faced by agricultural workers in developing countries.

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