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Labor Markets, Inequality and Poverty in Georgia

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  • Yemtsov, Ruslan

    ()
    (World Bank)

Abstract

The labor market is the main channel through which economic growth affects poverty. This paper is the first empirical account of main channels through which the growth in transition period has affected labor market and living standards in Georgia. It is based on both the official aggregate statistics and data from a representative household survey fielded in 1996-1997. The paper finds that in Georgia the labor market has shown outstanding flexibility during a period of severe political and economic turmoil in 1992-1995. Despite the catastrophic fall in GDP employment contracted only marginally. This flexibility has been achieved mainly through the informalization of employment, and through the reallocation of labor towards small-scale agriculture. Informalization has dampened the impact of the crisis and served to protect the poor, stabilizing the poverty rate at the politically and socially acceptable level (around 15% of the population). However, the informalization limited the impact of market forces favoring human capital accumulation on the formation of earnings. Today, a large and growing fraction of the Georgian labor force relies on self-employment as the primary means to earn an income. For some, this is an avenue for earnings mobility and growth; for the majority, however, self-employment remains constrained to low-productivity agricultural or trading activities, with little earnings stability and little potential for long term earnings growth. Prospects for the future hinge critically on the economy’s ability to generate new private formal employment, and to reallocate labor away from these low-productivity activities into higher value added sectors.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 251.

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Length: 36 pages
Date of creation: Jan 2001
Date of revision:
Handle: RePEc:iza:izadps:dp251

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Related research

Keywords: Employment; unemployment; self-employment; informal sector; real wage; productivity; earnings; inequality; returns to education; poverty; gender gap;

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Cited by:
  1. Winkelmann, Rainer, 2001. "Why Do Firms Recruit Internationally? Results from the IZA International Employer Survey 2000," IZA Discussion Papers 331, Institute for the Study of Labor (IZA).
  2. Pagés, Carmen & Stampini, Marco, 2007. "No Education, No Good Jobs? Evidence on the Relationship between Education and Labor Market Segmentation," IZA Discussion Papers 3187, Institute for the Study of Labor (IZA).
  3. Lokshin, Michael & Yemtsov, Ruslan, 2003. "Evaluating the impact of infrastructure rehabilitation projects on household welfare in rural Georgia," Policy Research Working Paper Series 3155, The World Bank.
  4. World Bank, 2002. "Georgia : Poverty Update," World Bank Other Operational Studies 15447, The World Bank.
  5. Bernabè, Sabine & Singh, Andrea, 2002. "A profile of informal employment : the case of Georgia," ILO Working Papers 355192, International Labour Organization.
  6. Olga Pavlova & Oleksandr Rohozynsky, 2005. "Labor Markets in CIS Countries," CASE Network Studies and Analyses 0311, CASE-Center for Social and Economic Research.
  7. Tamar Khitarishvili, 2013. "Evaluating the Gender Wage Gap in Georgia, 2004 - 2011," Economics Working Paper Archive wp_768, Levy Economics Institute.

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