Urbanization and Economic Growth.

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This research project will use experimental methods to study two channels through which access to cities may cause economic and social change: markets and denser social networks. Cities are hubs of innovation and entrepreneurship, both important drivers of economic growth. However, there is little credible empirical evidence about the mechanisms behind the economic benefits of cities because urbanization occurs alongside several social and economic change. The experiments involve providing free transportation of rural dwellers to urban markets as well as urban social events. Exposure to markets has been shown to be associated with greater cooperation and more trust in anonymous strangers; two key ingredients for a successful economy. By facilitating denser social networks, cities enable the cross-fertilization of ideas and drive innovation. Reducing barriers to urban access could thus promote business relations, provide information about new opportunities, and new ideas that individuals could then bring back to their communities. This research will provide credible causal estimates of the importance of access to urban centers for rural dwellers. In doing this, it will provide evidence about the importance of these different mechanisms through which urban centers facilitate economic growth. The results of this research project will provide policy makers a mechanism to link rural areas with urban areas and thus reduce the rural-urban income differential.This research project will study the randomized rollout of a program that facilitates urban access for people living in rural areas. Implemented by an NGO, this `City Access Program' provides rural dwellers with regular weekly transportation to the nearest large city. The program has two components, which will be the `treatment arms' of the study. In the `market’ arm, the NGO provides transportation directly to the city’s central market and encourages participants to buy or sell goods there as they please. In the `social’ treatment arm, NGO provides transportation to the city along with an invitation to attend one or more of a series of social group activities, either a dancing/music group or a church group. The random assignment of participants to these treatments or to control group will allow the PIs to estimate causal effects of providing rural dwellers with greater access to the city in general—and to urban markets and social networks in particular. The project will examine how such exposure affects individuals’ economic behaviors and wellbeing, beliefs and values, psychological traits, and social interactions. The results of this research project will provide policy makers a mechanism to link rural areas with urban areas and thus reduce the rural-urban income differential.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.