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.
While LAC continues its progress towards becoming a middle-class region, in 2013 poverty reduction was slower than in previous years. The bottom 40 percent of the population has also seen decelerating income growth since the 2008-2009 global financial crisis. Driving the lower gains in shared prosperity and poverty reduction is the region’s slowing economic growth. Similarly, after more than a decade of steady decline, inequality has been stagnant since 2010 and remains high. Given the crucial role of labor earnings in poverty and inequality reduction, this report analyzes more deeply LAC’s labor markets and its implications for the region’s social gains going forward. It shows that the region’s push to increase its human capital has yielded dividends; increases in the educational attainment of the labor force are evident across the region. Nonetheless, the substantial growth in wages observed during the last decade was not accompanied by significant changes in the labor market: agriculture and low-productivity, informal service employment continued to be key sources of income for the poor in LAC. Instead, most of the gains were seen in countries that benefitted from the commodity boom of the last decade. As the commodity boom fades and growth wanes, there is a risk that the social gains achieved in the century’s first decade will erode.
For the last decade, economic growth in Latin America and the Caribbean (LAC) has sharply accelerated, pushing poverty and inequality to historic lows in the most unequal region in the world. In 2012, as the world’s ongoing economic problems make optimistic predictions less certain and threaten to undermine gains against poverty and inequality, it is critical to understand the structural forces that have promoted recent positive social outcomes. This report explores how women in the region have played a critical role in achieving the poverty declines of the last decade, with their labor market participation rates growing 15 percent from 2000 to 2010. It further considers how future progress will require increased female economic power and more effective policies to promote it. If female labor income had remained the same during this period, holding all else constant, extreme poverty in Latin America and the Caribbean would have been 30 percent higher in 2010. In other words, 17.7 percent of the population in the region would have been below the extreme poverty rate, compared to the actual 14.6 percent. The report suggests focusing public policy on three priorities: expanding female labor market opportunities; improving female agency which — while important in its own right — has important potential benefits for equality of economic opportunities and assets, and supporting the growing number of poor single female-headed households. Along with these suggested policy priorities, strong monitoring and evaluation systems should be included to every extent possible.