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Unemployment - poverty trade-offs

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  • Agenor, Pierre-Richard

Abstract

The author examines the potential trade-offs that may arise between poverty alleviation and unemployment reduction. He discusses various analytical arguments that may provide a rationale for their existence, and uses three alternative methodologies to assess their relevance: a vector autoregression framework (which is applied to Brazil and Chile), cross-country regressions, and simulations with a structural macro model linked to a household survey. Impulse response functions to output and wage shocks indicate no short-run tradeoff. between unemployment and poverty. By contrast, regression results, which control for a variety of determinants of poverty rates across countries, suggest that such a trade-off may indeed exist. Simulations with the structural model show that labor market reforms may induce both short- and long-run trade-offs between the composition of unemployment and the incidence of poverty among household groups.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3297.

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Date of creation: 01 May 2004
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Handle: RePEc:wbk:wbrwps:3297

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Related research

Keywords: Public Health Promotion; Health Monitoring&Evaluation; Economic Theory&Research; Environmental Economics&Policies; Labor Policies; Environmental Economics&Policies; Health Monitoring&Evaluation; Economic Theory&Research; Achieving Shared Growth; Poverty Assessment;

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  1. Agenor, Pierre-Richard & Jensen, Henning Tarp & Verghis, Mathew & Yeldan, Erinc, 2006. "Disinflation, fiscal sustainability, and labor market adjustment in Turkey," Policy Research Working Paper Series 3804, The World Bank.
  2. Agenor, Pierre-Richard & Aynaoui, Karim El, 2003. "Labor market policies and unemployment in Morocco : a quantitative analysis," Policy Research Working Paper Series 3091, The World Bank.
  3. Aghion, Philippe & Howitt, Peter, 1991. "Growth and Unemployment," CEPR Discussion Papers 577, C.E.P.R. Discussion Papers.
  4. Marianne Baxter & Robert G. King, 1995. "Measuring Business Cycles Approximate Band-Pass Filters for Economic Time Series," NBER Working Papers 5022, National Bureau of Economic Research, Inc.
  5. Agenor, Pierre-Richard, 2002. "Macroeconomic adjustment and the poor : analytical issues and cross-country evidence," Policy Research Working Paper Series 2788, The World Bank.
  6. C Bean & Christopher A. Pissarides, 1992. "Unemployment, Consumption and Growth," CEP Discussion Papers dp0100, Centre for Economic Performance, LSE.
  7. Joshua Aizenman & Pierre-Richard Agénor, 1994. "Macroeconomic Adjustment with Segmented Labor Markets," IMF Working Papers 94/56, International Monetary Fund.
  8. Martin Ravallion, 2004. "The Debate on Globalization, Poverty and Inequality: why Measurement Matters," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 1, March.
  9. Lawrence J. Christiano & Terry J. Fitzgerald, 1999. "The Band Pass Filter," NBER Working Papers 7257, National Bureau of Economic Research, Inc.
    • Lawrence J. Christiano & Terry J. Fitzgerald, 2003. "The Band Pass Filter," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 435-465, 05.
  10. World Bank, 2004. "Unlocking the Employment Potential in the Middle East and North Africa : Toward a New Social Contract," World Bank Publications, The World Bank, number 15011, October.
  11. Fabio Arico, 2003. "Growth and Unemployment: Towards a Theoretical Integration," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 419-455, 07.
  12. Agenor, Pierre-Richard & Chen, Derek H.C. & Grimm, Michael, 2004. "Linking representative household models with household surveys for poverty analysis : a comparison of alternative methodologies," Policy Research Working Paper Series 3343, The World Bank.
  13. Cahuc, P. & Michel, P., 1992. "Minimum Wage, Unemployment and Growth," Papiers d'Economie Mathématique et Applications 92.35, Université Panthéon-Sorbonne (Paris 1).
  14. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-44, January.
  15. Angus Deaton, 2000. "Counting the world’s poor: problems and possible solutions," Working Papers 212, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  16. King, Ian & Welling, Linda, 1995. "Search, unemployment, and growth," Journal of Monetary Economics, Elsevier, vol. 35(3), pages 499-507, June.
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Cited by:
  1. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2010. "FDI in Agricultural Land, Welfare and Unemployment in a Developing Economy," MPRA Paper 23488, University Library of Munich, Germany.

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