Does urbanization always foster human capital accumulation?

The importance of human capital has been crucial in explaining the process of economic development. In the present study, we perform cross-country estimations, measuring the relation between human capital accumulation and urbanization. Using a macro level approach we highlight a U-shaped relation, where urbanization rates below 40 percent deter human capital accumulation. This especially holds for developing countries, raising policy concerns on issues of over-urbanization.