labor markets, growth and poverty diagnostics in africa louise fox & melissa sekkel africa...
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Labor Markets, Growth and Poverty Diagnostics in Africa
Louise Fox & Melissa SekkelAfrica Poverty Reduction and Economic
ManagementOffice of the Director
Main Questions
How can the characteristics of the labor market act as a barrier to or an engine for growth?
What is employment content of growth and its quality/characteristics important for its poverty impact?
What are the measurement difficulties in quantifying the link between growth, employment creation and poverty reduction?
Quick Stylized View of AFR Labor Market
About 80% self-employed or in family business, with 50% in agriculture as main sector (share of value added much lower)
Anecdotal and limited time use data suggests frequent underemployment
Growing rapidly 2.5% per annum 46% less than $1/day
Measurement Issues
Not much work on theory of growth, labor market and poverty reduction in low income countries Lewis, Fields
What concepts are we measuring? Job, enterprise and household are one –
what is LFPR? Can you measure? What is supply and what is demand? What is wage/income?
Pro-poor Growth in Africa Studied 6 high growth, poverty reduction
countries where we had at least 2 data points. Key elements: Sustained, balanced growth, including in
agricultural sector – diversification, etc. Aid one key driver (reward for good policies),
exports in some countries Economic growth high enough to absorb
labor force over 6-10 year period despite public sector job restructuring
Employment-Poverty Link
Using per capita consumption as proxy for labor income: Agriculture poverty headcount fell in all
countries Non-Agricultural informal sector employment
increased in all countries while poverty headcount fell
Employment in formal increased in some, was stagnant or fell in others, but in all countries except Burkina Faso, poverty rate fell
Role of Labor Markets
In these high pro-poor growth countries no evidence of labor market as barrier or engine – was not the binding constraint
What does seems to be key? Mobility - Labor moved easily from low
productivity agriculture sector to higher productivity sectors, and to private sector
Expansion of informal sector Income grew as fast or faster than other
sectors
Labor Characteristics Important for Pro-poor Growth Labor regulation
Some rated below AFR average in “Doing Business” on labor market flexibility, some rated at average or above
Senegal, with high regulation, had best formal sector job expansion
Labor costs small – more important are costs of inputs and risk
Investigate: support for informal sector Micro credit?
Analytics
Need multi purpose household survey Changes in labor force share, average
income for households classified by sector of head by quintile
Changes in characteristics of total labor force, by gender by quintile, portfolio
Migration of head, of members, role of remittances
Women vs. men in informal sector
Conclusions
High, balanced growth does raise all boats in Africa now – a recovery period
Informal sector not “dumping ground” for the labor force – it is clearly linked to growth in other sectors Increased incomes fuel demand through
consumption link Supplier to agriculture and formal sector
Regulation: not a constraint yet - labor costs too low as a share of total mfr costs