between country _C_ and the United States in 2017. The poverty rate at the national level, _P_ 0<sup>_C_,is</sup> then measured as the percentage of the population living in poverty: where _I_ ( _._ ) is an indicator function that takes on the value 1 if the bracketed expression is true or 0 otherwise, _NC_ is the total population in country _C_ , and _IPL_ 2017 represents one of the international poverty lines expressed in US$ in 2017 PPP terms. The subnational poverty rate for region _r_ , _P_ 0<sup>_r_,isexpressedinthefollowingway:</sup> The global poverty measurement methodology described above faces several methodological challenges. One of the main challenges is the variation in the definition of urban areas across countries. Each country has its own definition of urban areas, and these definitions can differ significantly (Dijkstra et al., 2021;Roberts et al., 2017; Satterthwaite, 2007; World Bank, 2009). As a result, comparing urban and rural poverty across countries becomes inconsistent and unreliable. Another challenge is the limited focus on adjusting the cost of living across subnational areas _within_ countries in the context of global poverty measurement. While there has been considerable attention given to accounting for differences in prices _between_ countries (for example; Deaton, 2010; Ravallion, 2018), less emphasis has been placed on adjusting for cost-of-living variations within countries. This is particularly important when estimating urban and rural poverty, as living expenses can vary significantly between urban and rural areas (Bidani and Ravallion, 1993; Jolliffe et al., 2004; Jolliffe, 2006; Nakamura and Yoshida, 2021). Failing to account for these subnational differences in the cost of living tends to result in an underestimation (overestimation) of urban (rural) poverty. Furthermore, housing costs are often excluded from spatial price deflators in global poverty measurement. However, housing costs tend to vary the most across different locations, particularly in urban areas. By excluding housing costs from the price deflators, the cost of living in urban areas is underestimated.<sup>9</sup> This can lead to an overestimation of the living standards of urban households and an underestimation of urban poverty, as well as an underestimation of rural living standards and an overestimation of rural poverty.

Ravallion et al. (2007) and Ferré et al. (2012) are important studies that have contributed to our understanding of the spatial dimension of poverty from a global perspective. Ravallion et al. (2007) conducted a groundbreaking study that examined the urbanization of global poverty using data from over 200 household surveys in approximately 90 countries between 1993 and 2002. The study introduced several innovative approaches. Firstly, it utilized global poverty lines to measure poverty, providing a standardized measure across countries. Secondly, it addressed the differences in the cost of living between urban and rural areas by calculating the ratio of urban and rural poverty lines for each country.<sup>10</sup> Thirdly, the authors analyzed the dynamic aspects of urbanization and poverty reduction, as well as the and heterogeneity across different world regions, using multiple data points over time. However, one limitation of Ravallion et al. (2007) is the possible bias from the inconsistent urban definitions across countries.

> 9A counterargument here is that higher housing costs in urban than in rural areas for properties that share the same structural characteristics (i.e., size, number of rooms, etc.) reflect, at least in part, the existence of superior urban amenities, including access to basic services, which are welfare-enhancing. To the extent that this is the case, it is unclear how to incorporate the value of these amenities into the welfare measure.

> 10More precisely, Ravallion et al. (2007) create another global poverty line for each country based on the ratio of the country’s urban and rural poverty lines. Essentially, this is equivalent to deflating household consumption expenditures by a spatial deflator derived as the ratio. The poverty lines used for the analysis are constructed following the cost-of-basic-needs approach (Ravallion and Bidani, 1994) in most countries.

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