The composition of growth matters for poverty alleviation
AbstractThis paper contributes to explain the cross-country heterogeneity of the poverty response to changes in economic growth. It does so by focusing on the structure of output growth itself. The paper presents a two-sector theoretical model that clarifies the mechanism through which the sectoral composition of growth and associated labor intensity can affect workers' wages and, thus, poverty alleviation. Then, it presents cross-country empirical evidence that analyzes, first, the differential poverty-reducing impact of sectoral growth at various levels of disaggregation, and, second, the role of unskilled labor intensity in such differential impact. The paper finds evidence that not only the size of economic growth but also its composition matters for poverty alleviation, with the largest contributions from unskilled labor-intensive sectors (agriculture, construction, and manufacturing). The results are robust to the influence of outliers, endogeneity concerns, alternative explanations, and various poverty measures.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 93 (2010)
Issue (Month): 1 (September)
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Web page: http://www.elsevier.com/locate/devec
Poverty Economic growth Production structure Labor intensity;
Other versions of this item:
- Loayza, Norman V. & Raddatz, Claudio, 2006. "The composition of growth matters for poverty alleviation," Policy Research Working Paper Series 4077, The World Bank.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
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