Urban Slums:

Moving On and Up?

November 22, 2016

Name Removed...... GPP 520

‘Economics of Poverty’

Phot

Contents

• Intro - Urbanization and Slums

• Literature Review

• Field Study

Sample

Research-specific questions

Model

• Issues and limitations

• Research Prospects

• References

Slide 2 of 21

Introduction – Slums overview

Slide 3 of 21

UN-HABITAT State of the World’s Cities Report 2010-2011:

• 1/3 of the urban population in developing countries (almost 1 billionpeople) lives in slums (2010)

• Between 2000 and 2010, the number of slum dwellers increased by6 million every year.

• More than 70 per cent of Africa’s urban population lives in slums.

Slum dwellers – households lacking in:

• access to improved water• access to improved sanitation• sufficient living area• durability of housing

Introduction – Slums prevalence

Slide 4 of 21

Share of urban population living in slums (2014)

Source: World Bank Data, from the United Nation's Millennium Development Goals database

Introduction 1 – Slums and Development

Slide 5 of 21 * China is highlighted

Source: World Bank Data, author’s layout

Introduction 2 – Slums and Urbanization

* China is highlighted

Source: World Bank Data, author’s layout Slide 6 of 21

Introduction – Slums and Economic Growth

Slide 7 of 21 * China is highlighted

Source: World Bank Data, author’s layout

Potential Problem!

Literature Review 1 (4)

Slide 8 of 21

Marx et al (2013) The Economics of Slums in the Developing World

Key review paper – main stats, poverty traps, policy review

Ambiguous empirical evidence on progress out of slums, insufficient panel data

studies

Potential poverty traps – “households do not necessarily move there planningto stay, but instead get caught in a low-level equilibrium” (p.202)

• Low human capital and poor health• Investment inertia• Policy trap

Kibera, Kenya (slum) – long slum tenure of respondents (average 16 years)

Literature Review 2 (4)

Slide 9 of 21

Glaeser (2011) What’s Good about Slums?

Chapter in a book “Triumph of the City”

Comparing the developed and developing countries

Emphasizing rural-to-urban migrants choice

• Life in urban slums better than rural poverty and stagnation

• Anecdotal evidence on progress out of slums – Entrepreneurs’ success

stories

Literature Review 3 (4)

Slide 10 of 21

Perlman (2006) The metamorphosis of marginality: four generations in the

favelas of Rio de Janeiro [& Perlman (2010) Favela:…]

2 stages: 1968-1969 and 1999-2003

• 41% attrition (potential bias)

• 63% of the found original interviewees moved out and ‘up’

• 64% and 68% of their children and grandchildren respectively too

• Improved access public services in the favelas for those who stayed

Evidence of upward mobility, but biased sample

Literature Review 4 (4)

Slide 11 of 21

APHRC (2013). Nairobi Urban Health and Demographic Surveillance Site

dataset. http://www.aphrc.org/

- In Marx et al (2013)

Between 2003 and 2007, 15% of slum residents moved locations

• 22% moved to a non-slum area in Nairobi• 26% moved to another slum,• 4% moved to another location in the same slums,• 41% moved to rural Kenya

Evidence of poverty traps rather than upward mobility

Research Questions

Slide 12 of 21

Upward mobility of slum residents

• What factors increase the probability of the slum resident moving out and ‘up’?

Human capital (education, health, experience)

Employment and income

Plans / expectations to move

• Assumption: moving out into formal housing is the long-term goal of rural migrants with slum living being a transitional stage

Human capital increases potential for stable employment

Income enables to afford better housing

A resident needs to want to move (verifying assumption)

Field Study 1 (5). Case Study

Slide 13 of 21

• China (2014)

Middle-income, fast-growing economy

54.4 urbanization rate

25.2% of all urban residents live in slums

(most slum dwellers in the world – 187 mil.)

“Villages in the city” (chengzhongcun)

• Panel data

China

2 slums in one city (options: Shanghai / Shenzhen / Guangzhou)

- Reduce the risk of external shocks

- Comparable economic environment

Target: 1,500 original respondents in each slum (random sample)

5 year lag with annual or biannual follow-ups

Field Study 2 (5). Survey

Slide 14 of 21

Based on Progress out of Poverty Index survey

(survey specific for rural China) (Schreiner 2012)

• 15-minute survey

• With amendments (6, 14) & additional questions relevant to slum residents:

Family (status – single +, where other family members live)

Income (+) and employment (+)

- in the slum (-) or outside (+)

- self-employment (?) (Glaeser 2011, Pereira & Bartholo 2015 VS. Hamilton 2000)

Tenure: length (parabolic), security (?), ‘hukou’ status (urban +)

Plan to move (+) (Neuwirth 2005)

Community participation (+) (Perlman 2006)

Perception question (residential satisfaction or matched expectations)

Field Study 3 (5). Survey

Source: Schreiner (2012) Slide 15 of 21

Expert-Based Poverty Scorecard for Rural China

Field Study 4 (5). Follow up survey

Slide 16 of 21

Attrition Issue

• Incentive - higher remuneration for participation

• Annual cell phone follow-ups for free calling minutes

- Storing up-to-date contact info

- Reinforced incentives and remembering

• Analyzing the profile of lost respondents

Follow up survey – same + additional questions if moved

• Control for external shocks (evictions, redevelopment, improvements)

• If moved, Moved to:

- Same or different city

- Formal housing, another slum, back to the village

Field Study 5 (5). Model

Slide 17 of 21

1. Probability of moving as dependent variable (0 and 1)

Factors (from the first survey):

• Demographic

• Human capital

• Employment & income

• Slum tenure

• Moving plan

1. (Potentially) analyzing changes in the total score for those who

moved (1) and stayed (0)

• Understanding the link between moving out of poverty and moving out of a slum

Issues and Limitations

Slide 18 of 21

1. Attrition (difficulty; bias in retained participants; relatively expensive in major

cities)

2. Coefficient interpretation (complications with probability-based models)

3. External shocks to the slum (positive & negative)

4. Other external factors (e.g. potential reform of the ‘hukou’ system)

Research Prospects

Slide 19 of 21

Before coming to the slum

Relocation decision before the slum – Fulfilled expectations?

General political and economic context

Government policies (local / federal) affecting living preferences

What happens in slums in cities of stagnating economies?

Slum upgrading

Residential satisfaction

Slum improvements => making them places to stay?

References 1 (2)

Slide 20 of 21

1. Fitzgerald, J., Gottschalk, P., & Moffitt, R. A. (1998). An analysis of sample

attrition in panel data: The Michigan Panel Study of Income Dynamics. NBER.

2. Glaeser, E. (2011). Triumph of the city: How urban spaces make us human. Pan

Macmillan.

3. Hamilton, B. H. (2000). Does entrepreneurship pay? An empirical analysis of the

returns to self‐employment. Journal of Political economy, 108(3), 604-631.

4. Marx, B., Stoker, T., & Suri, T. (2013). The economics of slums in the developing

world. The Journal of Economic Perspectives, 27(4), 187-210.

5. Neuwirth, R. (2005). Shadow cities. Routledge New York.

6. Pereira, I. N., & Bartholo, R. (2015). Entrepreneurship in Rocinha: A Non Goal-

Driven Activity. Entrepreneurship in BRICS (pp. 163-175). Springer International

Publishing.

References 2 (2)

Slide 21 of 21

7. Perlman, J. (2006). The metamorphosis of marginality: four generations in the

favelas of Rio de Janeiro. The Annals of the American academy of Political and

social science, 606(1), 154-177.

8. Perlman, J. (2010). Favela: Four decades of living on the edge in Rio de Janeiro.

Oxford University Press.

9. Schreiner, M. (2012). An Expert-Based Poverty Scorecard for Rural China.

microfinance.com/English/Papers/Scoring_Poverty_China_EN.pdf, retrieved

Nov. 21st, 2016.

10. World Bank Development Indications (database)

11. UN-HABITAT. (2010). State of the world's cities 2010/2011: bridging the urban

divide.