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Does Employment Generation Matter for Poverty Reduction?

Sponsors: Thematic Group on Poverty Impact Analysis, Monitoring and Evaluation and the Labor Markets Thematic Group 
 
Presenter: Catalina Gutierrez and Pierella Paci (PRMPR)

Date: Thursday, May 31 12:30 - 2:00pm
 
Recent years have seen a growing concern amongst policy makers with ‘jobless’ growth as a major obstacle for the poor from benefiting from the positive growth performance experienced by many countries worldwide. This has been reflected in (i) an increased emphasis on the employment elasticity of growth as an indicator of the equity of the growth process, and (ii) an intense debate on how best to foster employment-intensive growth. But is employment-intensive growth sufficient to ensure poverty reduction? Is it even necessary in Low Income Countries (LICs) where unemployment is a luxury, and most people are employed in low productivity, low wage activities? Another recurrent issue in the policy discussion is whether poverty reduction is more effectively achieved by a growth pattern that favors the sectors of the economy in which the poor are, so as to enhance employment opportunities, or by one that advances disproportionally the sectors where the poor are not, so that more of the poor can be drawn into the higher-earning parts of the economy.

The paper provides some answers to these questions using macro-evidence from a large number of countries. It also attempts to assess the extent to which the prevailing labor market conditions and the average skill of the labor force play a role in explaining differences in growth patterns.

Background Paper

Does Employment Generation Really Matter for Poverty Reduction?, by Catalina Gutierrez, Carlo Orecchia, Pierella Paci, and Pieter Serneels (456kb PDF)

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