This note analyzes whether and how thecountry’s rising urbanization levels (measured primarily bypopulation density) are associated with nonfarm job creationand poverty reduction. By focusing on Rwanda’s 416geographic sectors for the decade from 2002 and 2012, theanalysis shows that, overall, a 10 percent increase inpopulation density at the geographic sector level wasassociated with a 1.2 percent lower multidimensional povertyindex and 1.4 point higher share of nonfarm employment.These linkages are estimated to be stronger in the areaswith higher population density as of 2002, were closer toKigali, and/or had better market access. Although increasingpopulation density was profoundly associated with povertyreduction and job creation in secondary cities and areaswithin a five‐kilometer radius, those linkages are lessclear in areas beyond five kilometers from the city cores.The finding highlights the importance of extending economicopportunities to the poor living in the outer areas ofsecondary cities, which accounts for a third of thecountry’s poor population. This Note also finds that fewerfarmers are poor where fewer nonfarm workers are in povertyin the same areas or surrounding areas, and the latterpoints to spillover effects.
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