Is Climate Change Slowing the Urban Escalator Out of Poverty? Evidence from Chile, Colombia, and Indonesia

Abstract

While urbanization has great potential to facilitate poverty reduction, climate shocks represent a looming threat to such upward mobility. This paper empirically analyzes the effects of climatic risks on the function of urban agglomerations to support poor households’ escape from poverty. Combining household surveys with climatic datasets, our analyses of Chile, Colombia, and Indonesia find that households in large metropolitan areas are more likely to escape from poverty, indicating better access to economic opportunities in those areas. However, climate shocks such as extreme rainfalls and high flood risks significantly reduce upward mobility, thus offsetting such benefits of urban agglomerations. The findings underscore the need to enhance resilience among the urban poor to allow them to fully utilize the benefits of urban agglomerations.