The Composition of Growth Matters for Poverty Alleviation
38 Pages Posted: 20 Apr 2016
Date Written: December 2006
Abstract
This paper contributes to explain the cross-country heterogeneity of the poverty response to changes in economic growth. It does so by focusing on the structure of output growth. The paper presents a two-sector theoretical model that clarifies the mechanism through which the sectoral composition of growth and associated labor intensity can affect workers' wages and, thus, poverty alleviation. Then it presents cross-country empirical evidence that analyzes first, the differential poverty-reducing impact of sectoral growth at various levels of disaggregation, and the role of unskilled labor intensity in such differential impact. The paper finds evidence that not only the size of economic growth but also its composition matters for poverty alleviation, with the largest contributions from labor-intensive sectors (such as agriculture, construction, and manufacturing). The results are robust to the influence of outliers, alternative explanations, and various poverty measures.
Keywords: Pro-Poor Growth and Inequality, Population Policies, Economic Growth, Rural Poverty Reduction, Labor Markets
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By David Dollar and Aart Kraay
-
Growth Still is Good for the Poor
By David Dollar, Tatjana Kleineberg, ...
-
What Can New Survey Data Tell Us About Recent Changes in Distribution and Poverty?
By Martin Ravallion and Shaohua Chen
-
By David Dollar and Aart Kraay
-
How Did the World's Poorest Fare in the 1990s?
By Shaohua Chen and Martin Ravallion
-
Inequality and Growth: What Can the Data Say?
By Abhijit V. Banerjee and Esther Duflo
-
Inequality and Growth: What Can the Data Say?
By Abhijit V. Banerjee and Esther Duflo
-
True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone