Loayza, Norman V.Raddatz, Claudio2012-06-222012-06-222006-12https://hdl.handle.net/10986/8857This 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.en-USCC BY 3.0 IGOABUSEAGGREGATE GROWTHAGGREGATE OUTPUTAGRICULTURAL GROWTHCHANGES IN POVERTYCOBB-DOUGLAS PRODUCTION FUNCTIONCONSIDERABLE DISPERSIONCONSTANT RETURNSCOUNTRY SPECIFICDEPENDENT VARIABLEDEVELOPING COUNTRIESDISTRIBUTION DATAECONOMIC ACTIVITYECONOMIC CONDITIONSECONOMIC GROWTHELASTICITY OF SUBSTITUTIONEMPIRICAL EVIDENCEEMPIRICAL LITERATUREEMPIRICAL SECTIONEMPLOYMENTESTIMATION RESULTSEXCHANGE RATEEXPLANATORY VARIABLESFIXED EFFECTSGINI COEFFICIENTGROWTH ^ RATEGROWTH EFFECTGROWTH ELASTICITYGROWTH PATHGROWTH RATEGROWTH RATESGROWTH RELATIONSHIPHEADCOUNT POVERTYHIGHER INEQUALITYHOUSEHOLD DATAHOUSEHOLD INCOMEHOUSEHOLD SURVEYHOUSEHOLD SURVEYSHUMAN CAPITALIMPACT ON POVERTY REDUCTIONINCIDENCE OF POVERTYINCOME DISTRIBUTIONINCOME GROWTHINCOME INEQUALITYINDIVIDUAL COUNTRIESINDUSTRIAL SECTORINTERMEDIATE GOODSLABOR INTENSITIESLABOR INTENSITYLABOR MARKETLABOR MARKETSLABOR MOBILITYLABOR REALLOCATIONLABOR SHARELABOR-INTENSIVE GROWTHLEVEL OF TECHNOLOGYLITERACY RATESMEAN INCOMEMEAN INCOME GROWTHMORTALITYNATIONAL ACCOUNTS0 HYPOTHESISOUTPUT GROWTHPOLICY CIRCLESPOLICY RESEARCHPOLICY RESEARCH WORKING PAPERPOOR COUNTRIESPOOR HOUSEHOLDSPOOR INDIVIDUALSPOVERTY ALLEVIATIONPOVERTY CHANGEPOVERTY CHANGESPOVERTY DATAPOVERTY GAPPOVERTY LEVELPOVERTY LINEPOVERTY MEASUREPOVERTY MEASURESPOVERTY REDUCINGPOVERTY REDUCTIONPRO POORPRODUCTION FUNCTIONPRODUCTION GROWTHREAL WAGEREAL WAGESRELATIVE PRICESRESPECTRURAL AREASSECTOR MODELSECTORAL COMPOSITIONSECTORAL GROWTH RATESSERVICE SECTORSSHARE OF LABORSQUARED POVERTY GAPTECHNOLOGICAL PROGRESSTOTAL EMPLOYMENTTOTAL OUTPUTUNEQUAL COUNTRIESUNSKILLED LABORUNSKILLED WORKERSURBANIZATIONUTILITY FUNCTIONWAGE INCREASEWAGE EQUALIZATIONWAGE GAINSWAGE GROWTHWAGE RATEWORKERWORKERSWorld Bank10.1596/1813-9450-4077