Key message 3 – We also need to understand and encourage one of the benefits of urbanisation – upward mobility out of city slums

Upward mobility is the flip side of the issues discussed so far. It is the potential benefit of urban living. To understand the functioning of developing country cities, it is particularly crucial to get a better grasp of the dynamics of poverty in these areas. Are they producing permanent slum dwellers or is there some upward trajectory? Since the relevant alternative for most slum dwellers is rural poverty, it seems important to compare urban income dynamics with those in non-urban areas. Glaeser and Mare (2001) document that urbanites in the U.S. experience faster wage growth than residents of smaller towns, and De la Roca and Puga (2013) show the same holds for Spain. These facts are compatible with the view that cities can be forces of human capital. Yet there is little work on earnings dynamics in the developing world today. Indeed, researchers are only just starting to put together a decent statistical snap shot of economic life in the slums (Banerjee and Duflo 2007).

The first task is therefore measurement. The difficulty is that data is hard to come by in most urban slums and official data sources are often quite limited in quality. Researchers need to be able to obtain accurate income figures from slum dwellers.

The second task is to look at engaging in areas, like early childhood training, that could potentially make a difference to upward mobility. These projects need to be relatively low cost, so that they can be applied to a large number of people, and rigorously evaluated. These actions will shine a light on the slums and chart the way forward.

The slums of Hyderabad

Hyderabad is the capital of the southern Indian state of Telangana and houses about 6.8 million people, making it the fourth most populous city in India. However, according to a recent census, one third of the population of Hyderabad live in vast slums. This figure is also rapidly increasing – the 2011 census found a 264% increase in slum dwellers since 2001. Experts attribute the high slum concentration to increasing rural migration for work and a lack of effective urban planning. Policymakers need to urgently address the minimal housing options available to recent urbanites from backward regions if they are to ensure the development of all citizens of Hyderabad.