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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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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. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, Econometric Society, vol. 58(1), pages 113-44, January.
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  6. 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.
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  11. Aghion, Philippe & Howitt, Peter, 1994. "Growth and Unemployment," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 61(3), pages 477-94, July.
  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. Martin Ravallion, 2004. "The Debate on Globalization, Poverty and Inequality: why Measurement Matters," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, Associazione Rossi Doria, issue 1, March.
  14. Schaik, A.B.T.M. van & Groot, H.L.F. de, 1995. "Unemployment and endogenous growth," Discussion Paper, Tilburg University, Center for Economic Research 1995-75, Tilburg University, Center for Economic Research.
  15. King, Ian & Welling, Linda, 1995. "Search, unemployment, and growth," Journal of Monetary Economics, Elsevier, Elsevier, vol. 35(3), pages 499-507, June.
  16. 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.
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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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