LAC Poverty and Labor Brief

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Poverty and Labor Briefs is a semiannual series produced by the Latin America and the Caribbean Poverty Gender and Equity Group (LCSPP) of the World Bank. The briefs track and benchmark poverty and labor outcomes in the region using harmonized databases of socio-economic and labor market statistics.

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Social Gains in the Balance : A Fiscal Policy Challenge for Latin America and the Caribbean

2014-02-24, World Bank

In 2012, the Latin America and the Caribbean (LAC) region continued its successful drive to reduce poverty and build the middle class. The proportion of the region's 600 million people living in extreme poverty, defined in the region as life on less than $2.50 a day, was cut in half between 2003 and 2012 to 12.3 percent. Reflecting the upward mobility out of poverty, households vulnerable to falling back into poverty became the largest group in LAC in 2005, and represent almost 38 percent of the population. However, in the last two years, the share of vulnerable households has started to decline. The middle class, currently 34.3 percent of the population, is growing rapidly and is projected to replace the vulnerable as the largest economic group in LAC by 2016. The Southern Cone region (including Brazil) continued to be the most dynamic region and the main driver of poverty reduction in LAC, while poverty in Central America and Mexico proved more stubborn. About 68 percent of poverty reduction between 2003 and 2012 was driven by economic growth, with the remaining 32 percent arising from decline in inequality. Overall, equality of access to basic childhood goods and services has improved in recent years. Yet access can be further improved, and serious issues remain concerning the quality of those goods and services, particularly in education and housing infrastructure. Moreover, access increases with parental education and income or assets, reflecting low intergenerational mobility in many countries in the region. As with poverty reduction, most of the progress in equality of access since 2000 has come in the Southern Cone and the Andean regions, while many of Central America's countries managed only small improvements. There are also severe differences at the subnational level and between urban and rural areas, highlighting the need to strengthen the capacity of local governments to deliver high quality basic services to all their citizens.

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Did Latin America Learn to Shield Its Poor from Economic Shocks?

2011-10, World Bank

This brief includes the following headings: How did the 2009 economic crisis affect poverty in Latin America? Why did poverty rise by less than predicted in 2009? Why did the links between poverty and growth fray during this crisis? Resilient markets buoyed labor incomes during the crisis and did not exacerbate inequalities; increased social spending and better safety nets likely cushioned the fall; what is the impact of the emerging recovery on poverty? Agenda ahead; statistical annex; and notes.

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Latin America and the Caribbean Poverty and Labor Brief, June 2013 : Shifting Gears to Accelerate Shared Prosperity in Latin America and the Caribbean

2013-06, World Bank

The Latin America and Caribbean (LAC) region has made laudable progress in the past fifteen years in reducing poverty, building the middle class, and promoting prosperity for all levels of society. Extreme poverty, defined in this region as life on less than $2.50 a day, has declined by half, while in 2011 for the first time in recorded history the LAC region had a larger number of people in the middle class than in poverty. Across this region of close to 600 million people, the poor have been gaining faster than the already well off. But despite these impressive achievements, about 80 million people still live in extreme poverty, half of them in Brazil and Mexico. And millions more who have risen out of poverty risk being pulled back down into it by economic shocks and severe weather brought on by climate change. This brief reviews the LAC's progress toward these objectives, outlines the continuing challenges and proposes a policy framework for keeping the region on its upward arc and picking up the speed.

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A Break with History : Fifteen Years of Inequality Reduction in Latin America

2011-04, World Bank

In 2004 the World Bank released a regional report titled 'Inequality in Latin America: Breaking with History?' Analyzing data from the early 1990s to the early 2000s, a period in which many countries in the region were experiencing increasing inequality, this study raised the question of whether Latin America could reverse its historical pattern of high and persistent inequality. The report concluded that although not easy, breaking with history was more than ever possible in the region. An additional decade of data presented in this brief shows that it was possible, mainly due to changes in labor markets (including a reduction in educational inequality and the skill premia, and greater female labor force participation), a higher incidence of government transfers, and additional factors such as demographic changes. The decrease in inequality is driven mostly by improvements in labor income, particularly a reduction in skill premiums, reflecting improved access to education as well as other factors. In contrast to the recent Latin American trends, Asia is witnessing rising inequality, pushed up by China and India - where income has traditionally been more equal. However, inequality remains very high in Latin America, with levels significantly above other middle income countries. As Latin America enters a new decade, it does so knowing that inequality reduction is possible in the region.

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On the Edge of Uncertainty : Poverty Reduction in Latin America and the Caribbean during the Great Recession and Beyond

2011-12, World Bank

Strong poverty reduction in Latin America resumed with the growth rebound in 2010, as both moderate and extreme poor households benefitted from the recovery, accelerating poverty reduction to rates similar to those witnessed between 2003-2006 despite a 2.8 percent decline in Gross Domestic Product (GDP) per capita in Purchasing Power Parity (PPP) terms, poverty levels in Latin America (LAC) remained basically static during the great recession, as the poor were shielded from the economic crisis in some countries and continued to benefit from growth in others. In 2010, poverty reduction resumed sharply in Latin America, as household incomes were once again closely linked to economic growth at rates similar to pre-crisis years. Moderate poverty declined by almost 2.5 percentage points to reach 28 percent in 2010, while extreme poverty fell by more than 2 percentage points to reach 14 percent. As 2011 comes to a close, once again the global economy and Latin America are facing risks of yet another economic slowdown. Using household survey data from 2010 and selected labor market indicators through the third quarter of 2011, this note identifies some basic facts on the impact of the crisis and the recovery on the poor and explores their implications for poverty reduction in the region going forward.