**Figure 1. Subnational extreme poverty rates across countries**

<!-- Start of picture text --> 72<br>47 42 42 44 46<br>38<br>35<br>32<br>29 28<br>24 22 21 23<br>18<br>12 13 14<br>9 8<br>5<br>2 2 2 2 2 3 1 0 2 2 0 0 0<br>Angola Bangladesh Egypt Ethiopia Ghana Tanzania Vietnam<br>National Urban Urban center Urban cluster Rural<br><!-- End of picture text --> _Source_ : Combes et al. 2022.

_Note_ : Poverty is measured with the international poverty line (US$1.9 in 2011 PPP). Following the Degree of Urbanization methodology (Dijkstra et al. 2021), urban centers (clusters) are defined based on spatially contiguous sets of 1 km<sup>2</sup> grid cells for which population density of each cell ≥ 1,500 (300) people per km<sup>2</sup> and aggregate settlement population ≥ 50,000 (5,000).

Nevertheless, the contribution of urbanization to poverty reduction is not self-evident. Larger or denser cities do not necessarily help people escape from poverty in the presence of overcrowding, congestion, crime, air pollution, high cost of living, insufficient jobs for low-skilled workers, segregation, and so on. Also, cross-sectional negative correlations between density and poverty do not necessarily indicate upward mobility. Thus, it is not evident a priori that larger or denser cities are the best place for people to escape from poverty (for example, the argument favoring secondary towns in Gibson, Jiang, and Susantono (2022) and Christiaensen and Todo (2014)). Moreover, larger or denser cities accommodating a larger share of richer people does not necessarily mean that people are more likely to be nonpoor in those cities due to the sorting.

Therefore, it is an empirical question whether urban agglomerations facilitate poverty reduction. The first hypothesis to be tested is _people are more likely to become or stay nonpoor in larger or denser cities, compared to smaller or less densely populated towns_ .

# **Climatic and environmental stressors: Hypothesis 2**

Even if urban agglomerations support poverty reduction, the upward mobility of the poor could be hampered by climatic shocks and risks. Urban households may fall into poverty due to higher exposure to shocks, asset vulnerability, and lack of socioeconomic resilience (Hallegatte et al. 2017). In urban areas, poor households tend to be exposed to floods due to their residences facing high environmental hazard risks, high building density and overcrowdedness, and inadequate infrastructure. The more urban a location, the scarcer and more expensive the land becomes, pushing the poor into undesirable and risky locations within or at the peripheries of cities. As net consumers, urban households are also vulnerable to food price shocks triggered by climate anomalies.

The literature indeed found urban households more vulnerable to flooding/drought shocks in several countries. For example, Baez et al. (2017) analyzed the impacts of a severe tropical storm that hit Guatemala in 2020 with the largest rainfall in the country during the last five decades. Median per capita consumption fell by 12.6 percent in urban areas, a larger drop than in rural areas, significantly increasing urban poverty. Rising food prices due to the disaster shock contributed to the loss in urban households’ consumption, while a social safety net program protected mainly rural households.

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