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When Job Earnings Are behind Poverty Reduction

  • Inchauste, Gabriela

    ()

    (World Bank)

  • Azevedo, João Pedro

    ()

    (World Bank)

  • Olivieri, Sergio

    ()

    (World Bank)

  • Saavedra, Jaime

    ()

    (World Bank)

  • Winkler, Hernan

    ()

    (World Bank)

Improvement in labor market conditions has been the main explanation behind many of the poverty success stories observed in the last decade—that is the primary conclusion of an analysis of changes in poverty by income source. Changes in labor earnings were the largest contributor to poverty reduction for a sample of 16 countries where poverty increased substantially. In 10 of these countries, labor income explained more than half of the change in poverty, and in another 4 countries, it accounted for more than 40 percent of the reduction in poverty. A declining dependency rate accounts for over a fifth of the reduction in poverty in 10 out of 16 countries, while transfers and other nonearned incomes account for more than a quarter of the reduction in poverty in 9 of these countries. A further decomposition of the contribution of labor income to poverty reduction in Bangladesh, Peru, and Thailand found that changes in individual characteristics (education, work experience, and region of residence) were important, but that overall, increases in real earnings among the poor matter the most.

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Article provided by The World Bank in its journal Economic Premise.

Volume (Year): (2012)
Issue (Month): 97 (November)
Pages: 1-6

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Handle: RePEc:wbk:prmecp:ep97
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  1. Inchauste, Gabriela & Olivieri, Sergio & Saavedra, Jaime & Winkler, Hernan, 2012. "What is behind the decline in poverty since 2000 ? evidence from Bangladesh, Peru and Thailand," Policy Research Working Paper Series 6199, The World Bank.
  2. Azevedo, Joao Pedro & Inchauste, Gabriela & Olivieri, Sergio & Saavedra, Jaime & Winkler, Hernan, 2013. "Is labor income responsible for poverty reduction ? a decomposition approach," Policy Research Working Paper Series 6414, The World Bank.
  3. Francois Bourguignon & Francisco H.G. Ferreira & Nora Lusting, 2005. "The Microeconomics of Income Distribution Dynamics in East Asia and Latin America," World Bank Publications, The World Bank, number 14844.
  4. Ravallion, Martin & Shaohua Chen, 2004. "China's (uneven) progress against poverty," Policy Research Working Paper Series 3408, The World Bank.
  5. Essama-Nssah, B., 2012. "Identification of sources of variation in poverty outcomes," Policy Research Working Paper Series 5954, The World Bank.
  6. Dang, Hai-Anh & Lanjouw, Peter & Luoto, Jill & McKenzie, David, 2011. "Using repeated cross-sections to explore movements in and out of poverty," Policy Research Working Paper Series 5550, The World Bank.
  7. Datt, Gaurav & Ravallion, Martin, 1992. "Growth and redistribution components of changes in poverty measures : A decomposition with applications to Brazil and India in the 1980s," Journal of Development Economics, Elsevier, vol. 38(2), pages 275-295, April.
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