Is there an urban wage premium in Rwanda?

Policy brief Cities

  • Rwanda has prioritised urbanisation as a major driver of growth. Our research uses high quality household data to examine whether similar individuals earn and consume more in Rwanda’s cities than would do in its rural areas.
  • We find that nominal urban wages and consumption are larger for urban areas than for rural areas, and larger for bigger cities than for smaller cities.
  • Contrary to evidence for Uganda, Tanzania, and Nigeria, we find an urban wage and consumption premium for women.
  • Including unwaged working-age migrants in the sample reverses the urban wage premium – except for men in Kigali in the 2017 household survey – but not the urban consumption premium.
  • The extent to which migration to urban areas increases wages at a national level depends critically on continued urban job creation.
  • Our evidence suggests that investments in developing Kigali could increase productivity and reduce poverty the most. However, this must be weighed against the political, spatial justice, and social cohesion-related benefits of investments in secondary cities.