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Does employment generation really matter for poverty reduction ?

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Author Info

  • Gutierrez, Catalina
  • Orecchia, Carlo
  • Paci, Pierella
  • Serneels, Pieter

Abstract

This paper analyzes how the employment/productivity profile of growth and its sectoral pattern are correlated with poverty reduction. The authors use a sample of 104 short-run growth spells in developing countries, between 1980 and 2001. They also identify some conditions of the labor market and the economic environment that are associated with employment-intensive growth or specific sectoral growth. The results show that, inthe short run, although the aggregate employment-rate intensity of growth does not matter for poverty reduction any more than the aggregate productivity intensity of growth, the sectoral pattern of employment growth and productivity growth is important. Employment-intensive growth in the secondary sector is associated with decreases in poverty, while employment-intensive growth in agriculture is correlated with poverty increases. Similarly, productivity-intensive growth in agriculture is associated with decreases in poverty. Although the study does not address causality, coincidence of these phenomena in this large sample of heterogeneous countries and periods suggests that, in the short run, the sectoral productivity and employment pattern of growth may have important implications for poverty alleviation. Therefore, policies for reducing poverty should not overlook the sectoral productivity and employment implications of different growth policies.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4432.

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Date of creation: 01 Dec 2007
Date of revision:
Handle: RePEc:wbk:wbrwps:4432

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Keywords: Achieving Shared Growth; Labor Policies; Rural Poverty Reduction; Labor Markets; Population Policies;

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References

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  1. Esfahani, Hadi S & Salehi-Isfahani, Djavad, 1989. "Effort Observability and Worker Productivity: Towards an Explanation of Economic Dualism," Economic Journal, Royal Economic Society, vol. 99(397), pages 818-36, September.
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  7. Loayza, Norman V. & Raddatz, Claudio, 2006. "The composition of growth matters for poverty alleviation," Policy Research Working Paper Series 4077, The World Bank.
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  13. Ravallion, Martin, 2005. "Inequality is bad for the poor," Policy Research Working Paper Series 3677, The World Bank.
  14. Lopez, J. Humberto, 2004. "Pro-growth, pro-poor : is there a tradeoff?," Policy Research Working Paper Series 3378, The World Bank.
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  16. P R Agénor, 2004. "The Macroeconomics of Poverty Reduction," Centre for Growth and Business Cycle Research Discussion Paper Series 43, Economics, The Univeristy of Manchester.
  17. Mathan Satchi & Jonathan Temple, 2006. "Growth and labour markets in developing countries," CEDI Discussion Paper Series 06-12, Centre for Economic Development and Institutions(CEDI), Brunel University.
  18. Ravallion, Martin & Shaohua Chen, 2004. "China's (uneven) progress against poverty," Policy Research Working Paper Series 3408, The World Bank.
  19. William T. Dickens & Kevin Lang, 1985. "Testing Dual Labor Market Theory: A Reconsideration of the Evidence," NBER Working Papers 1670, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Arias-Vazquez , Francisco Javier & Lee, Jean N. & Newhouse, David, 2012. "The role of sectoral growth patterns in labor market development," Policy Research Working Paper Series 6250, The World Bank.
  2. Khanna, Gaurav & Newhouse, David & Paci, Pierella, 2011. "Fewer Jobs or Smaller Paychecks? Aggregate Crisis Impacts in Selected Middle-Income Countries," IZA Discussion Papers 5956, Institute for the Study of Labor (IZA).
  3. Puyana, Alicia, 2011. "Economic growth, employment and poverty reduction : a comparative analysis of Chile and Mexico," ILO Working Papers 462962, International Labour Organization.
  4. Rashid Amjad & G. M. Arif & Usman Mustafa, 2008. "Does the Labor Market Structure Explain Differences in Poverty in Rural Punjab?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 13(Special E), pages 139-162, September.
  5. Gindling, T.H. & Terrell, Katherine, 2008. "Minimum Wages, Globalization, and Poverty in Honduras," Working Papers RP2008/23, World Institute for Development Economic Research (UNU-WIDER).

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