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Fridays Academy: The Labor Market, Economic Growth, and Poverty Reduction

Ignacio Hernandez's picture

From Raj Nallari and Breda Griffith's lecture notes.




Over the study period examined in the exhibit below, the proportion of females in the labor force has increased in East Asia, Latin America, and the Middle East North Africa. Globally, the proportion of females in the labor force has increased by 1.5 percentage points between 1980 and 1999.  There is a great deal of variation across the regions. The relatively low share in the Middle East North Africa – 27.3 percent in 1999 – compared to the other regions has been linked to the non-enforcement of legislation protecting women’s employment rights and family laws that translate into women being less employable than men.  Overriding these factors is the fact that women are more likely to be employed in the informal sector and thus uncounted. 



Labor Supply Trends

 Source: Betcherman (2001)





Conclusion for Labor, Growth and Poverty Reduction


The labor market represents one of the main conduits through which economic growth can help reduce poverty in developing countries. While labor-friendly economic growth can be useful, especially where labor force growth is particularly high, the accompanying cost is, by definition, and other things being equal, low labor productivity growth. That said, labor force growth rates are particularly high in developing countries and is accompanied in many cases by the ongoing shift from agricultural employment; these would appear to call for either some form of labor friendly growth or for a marked increase in growth itself if an increase in unemployment or a shift to the informal sector is to be avoided. Other notable developing country concerns that need to be addressed include highly unequal wages and marked differences across gender in labor market access.


Next Friday we will start to study the relationship between land, growth and poverty reduction.  

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