The Role of Rural Labor Markets in Poverty Reduction : Evidence from Asia and East Africa

Abstract

By using long-term panel data sets of rural households in the Philippines, Thailand, Bangladesh, and India and cross-sectional data sets in Kenya, Uganda, and Ethiopia, the roles of labor markets in long-term poverty reduction in Asia is compared with the current situation in East Africa. The study finds that the reliance on agricultural labor markets alone will not reduce poverty to a significant extent, in view of the declining share of agricultural wage income in Asia and its negligibly low level in East Africa. An increased non-farm income is a decisive factor in reducing rural poverty, as it has reduced the income gaps between the land-rich and land-poor households, between the educated and uneducated workers, and between less and more favorable agricultural areas. Labor markets are clearly segmented in accordance with the schooling levels, which critically affect occupational choice and non-farm income of rural labor force.