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Does employment generation really matter for poverty reduction ?

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

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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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
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Handle: RePEc:wbk:wbrwps:4432
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  1. Kakwani, Nanak & Neri, Marcelo & Son, Hyun H., 2009. "Linkages between Pro-Poor Growth, Social Programmes and Labour Market: The Recent Brazilian Experience," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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  16. Pierre-Richard Agenor, 2005. "The Macroeconomics Of Poverty Reduction," Manchester School, University of Manchester, vol. 73(4), pages 369-434, 07.
  17. Lopez, J. Humberto, 2004. "Pro-growth, pro-poor : is there a tradeoff?," Policy Research Working Paper Series 3378, The World Bank.
  18. 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.
  19. James Heckman & Carmen Pages, 2003. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Working Papers 10129, National Bureau of Economic Research, Inc.
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  21. Fane, George & Warr, Peter G., 2002. "How Economic Growth Reduces Poverty: A General Equilibrium Analysis for Indonesia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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