Revisiting wage subsidies: How pro-poor is a South African wage subsidy likely to be?

Wage subsidies have been used in both developed and developing countries to raise employment. After a decade of deliberation, the South African Government recently announced the introduction of a wage subsidy scheme. Given the intrinsic link between unemployment and poverty in South Africa, the belief is that a wage subsidy programme sufficient in scope will also make inroads into poverty. However, the way in which jobs are distributed among poor and non-poor jobseekers is crucial. Our general equilibrium microsimulation model confirms the expectation that a higher wage elasticity of labour demand is associated with larger reductions in poverty. We also find that a greater proportion of new jobs accrue to poor jobseekers when the elasticity is high. While youth-targeting does not improve the poverty-reducing effect of the policy, sectors such as textiles, accommodation, and construction services with their pro-poor employment profiles are good candidates for targeting.     

Do International Remittances Affect Poverty in Africa?*

Abstract: International remittances flowing into developing countries are attracting increasing attention because of their rising volume and their impact on recipient countries. This paper uses a panel data set on poverty and international remittances for African countries to examine the impact of international remittances on poverty reduction in 33 African countries over the period 1990–2005. We find that international remittances—defined as the share of remittances in country GDP—reduce the level, depth, and severity of poverty in Africa. But the size of the poverty reduction depends on how poverty is being measured. After instrumenting for the possible endogeneity of international remittances, we find that a 10 percent increase in official international remittances as a share of GDP leads to a 2.9 percent decline in the poverty headcount or the share of people living in poverty. Also, the more sensitive poverty measures—the poverty gap (poverty depth) and squared poverty gap (poverty severity)—suggest that international remittances will have a similar impact on poverty reduction. The point estimates for the poverty gap and squared poverty gap suggest that a 10 percent increase in the share of international remittances will lead to a 2.9 percent and 2.8 percent decline, respectively, in the depth and severity of poverty in African countries. Regardless of the measure of poverty used as the dependent variable, income inequality (Gini index) has a positive and significant coefficient, indicating that greater inequality is associated with higher poverty in African countries, much in conformity with the literature. Similar results were obtained for trade openness. In the same vein, per capita income has a negative and significant effect on each measure of poverty used in the study. Our results also show that inflation rates positively and significantly affect poverty incidence, depth and severity in Africa. In all three poverty measures, the dummy variable for sub‐Saharan Africa is strongly positive, and strongly negative for North Africa. The policy implications of these results are discussed.     

生计资本、社会环境与贫困人口务工就业意愿

实现贫困人口务工就业作为脱贫攻坚时期贫困人口脱贫的主要方法,在巩固脱贫攻坚成果时期,同样具有可行性和有效性。因此,研究贫困人口务工就业意愿对巩固脱贫攻坚成果具有重要现实价值。本文从可持续生计和社会学习的角度建立二元 Logistics 回归模型,分析生计资本与社会环境对贫困人口务工就业意愿的影响。研究发现,在贫困人口的生计资本中,人力资本、社会资本和金融资本是影响贫困人口务工就业意愿的关键资本。同时,在社会环境中,贫困村的务工就业氛围对贫困人口的务工就业意愿呈显著正相关。在巩固脱贫攻坚成果时期,鼓励贫困人口务工就业措施更应聚焦贫困人口的类型特征,以实现政策的精确和高效。     

Is the development of the agro-processing industry pro-poor?: The case of Thailand

We examine how the development of the agro-processing industry contributed to poverty reduction in Thailand. The effects on farmers’ income are emphasized because most of the poor in Thailand are farmers. The development of the agro-processing industry could improve farmers’ income through two channels: (i) the purchase of agricultural products; and (ii) the employment of the poor farmers at factories. We show that the development of the agro-processing industry, which also played a leading role in the high economic growth of the Thai economy, contributed to poverty reduction through both of the two channels. It was hence pro-poor.     

The impact of banking services on poverty: Evidence from sub-district level for Bangladesh

The extent to which banking services can reduce poverty is under question as recent experimental evidence has suggested that there is no impact. Our findings, based on survey and administrative data, are to the contrary. We compile a unique dataset of banking measures and poverty indicators at the level of Bangladesh’s 544 administrative sub-districts. We find a relationship between banking services and poverty reduction, and show that the relationship works through the deposit channel rather than the credit channel. We exploit variation in branch placement by sub-district between 2010 and 2015 to implement a difference-in-difference estimation approach. We also estimate ordinary least squares and fixed effects models to explore the role of factors other than banking services in poverty incidence. Broad findings supporting a role for the deposit channel, but not the credit channel, are confirmed. These results have significant policy implications as governments in developing countries are actively involved in promoting financial inclusion through the banking sector.     

Financial permeation and rural poverty reduction Nexus: Further insights from counties in China

We investigate how financial permeation affects rural poverty reduction by matching representative county household data with the local banking market, FinTech development, and county characteristics data from China. We discover that financial permeation via bank branch expansion boosts household income and mitigates household vulnerability to poverty, and these effects are magnified on lower-income and more vulnerable households, especially in impoverished counties. Further considering the potential substitution effect of FinTech, we verify that enhancing financial permeation via bank branch expansion still matters to rural poverty reduction even in the digital era. Exploring the channels, we find that financial permeation accelerates rural poverty reduction directly through improving financial utilization and motivating investment activities and indirectly through spurring local economic growth. Notably, the more pronounced marginal effects of the channels on households in impoverished counties, to some extent, explain the poverty reduction effect of financial permeation. The results imply the necessity of financial permeation via bank branch expansion for the realization of shared prosperity.     

Soil and water conservation investments and rural development in China

This study uses a unique set of annual provincial data on soil and water conservation (SWC) investments during the period 1989–2005 to estimate the impact of such investments on the extent and severity of erosion, the growth rate of agricultural gross domestic product (GDP) and rural poverty reduction in China. We find that SWC investments made by local governments have a significant negative impact on the extent of erosion and (in recent years) the severity of erosion, whereas SWC investments made by farm households until recently had a significant negative effect on the severity of erosion. In its turn, the severity of erosion is found to have a significant negative impact on agricultural GDP. Estimation of the impact of the extent of erosion on agricultural GDP provides mixed results. Based on these results, we derive that one RMB invested in SWC by local governments increases agricultural GDP in 2002 with 0.84–1.25 RMB. Finally, we find that agricultural GDP has a significant negative impact on the rural poverty rate. The resulting indirect effect of SWC investment on rural poverty reduction, however, is small compared to other types of public investment. We conclude that (local) government investments in SWC do not only serve environmental goals, but also make a non-negligible contribution to agricultural growth and rural poverty reduction.     

The relation of criminal activity to black youth employment

This article reports on a study which attempts to estimate the extent to which current and previous criminal activity reduces the employment of inner city black male youths from high poverty neighborhoods. The study finds a significant trade-off between employment and crime, with crime associated with a 10 to 12 percent reduction in employment of these youths. The policy implication is that increased criminal deterrence, as well as other programs, has a role to play in efforts to resolve the employment crisis for disadvantaged youths.     

Born to be different: The role of local political leaders in poverty reduction in China

By incorporating imprinting theory into a political–economic framework, this paper studies the role of local political leaders in poverty reduction. Exploiting exogenous turnovers of city-level party secretaries in China, I find that city secretaries with early-life poverty experiences are more likely to increase the incomes of poor families in their jurisdictions. I further find that the effect of city secretaries' poverty experiences on the income of the poor is more pronounced in the counties that are not officially categorized as impoverished by the central government and among the families living above the poverty line set by the Chinese government but below the international poverty line proposed by the World Bank. It is suggested that local political leaders affect poverty reduction outcomes by instilling their personal preferences, which can be shaped by their early experiences, into their economic decisions.     

Income Strategies Among Rural Households in Mexico: The Role of Off-farm Activities

Off-farm activities generate on average more than half of farm households' incomes in the Mexican ejido sector. Participation in these activities helps reduce poverty and contributes to greater equality in the distribution of income. This paper analyzes the determinants of access to off-farm sources of income across households. We find that education plays a major role in accessing better remunerated nonagricultural employment. Adults of indigenous ethnic origin suffer from an educational lag and have less access to off-farm nonagricultural employment than non-indigenous adults at identical educational levels. The regional availability of off-farm employment strongly affects participation. In addition, women are differentially limited by distance to urban centers in their ability to gain off-farm employment.     

What Does a High School Diploma Get You? Employment, Race, and the Transition to Adulthood

We compare the employment of African American and white youth as they transition to adulthood from age 18 to 22, focusing on high school graduates and high school dropouts who did not attend college. Using OLS and hazard models, we analyze the relative employment rates, and employment consistency, stability, and timing, controlling for a number of factors including family income, academic aptitude, prior work experience, and neighborhood poverty. We find white high school graduates work significantly more than all other youth on most measures; African American high school graduates work as much and sometimes less than white high school dropouts; African American dropouts work significantly less than all other youth. Findings further suggest that the improved labor market participation associated with a high school diploma is higher over time for African Americans than for white youth.     

Employment and training solutions for the economically disadvantaged: An essay

Conclusion The persistence of urban poverty and the presence of economically disadvantaged families in our cities is a continuing challenge to national aspirations for equal opportunity and economic justice. A continuing bifurcation of society between those who enjoy an increasing share of economic prosperity and others who are stuck on the lowest rung of the economic ladder should be unacceptable. The search must continue for ways to improve the productivity and earning power of those who need assistance in getting a foothold on the escalator to a middle-income standard of living. Employment and training programs remain one of the options necessary to achieve that goal. While past programs have not been a panacea, they have contributed to a modest improvement in income among many who participated in them. In the choice of weapons required to combat urban poverty, employment and training programs should be part of the arsenal. The experience of the past, while limited, justifies continued investment in the employment and training option, and the continued experimentation with programs to address the needs of specific target groups. Only by testing new and increasingly comprehensive training models will we find the right mix to accelerate the decline in urban poverty. To achieve success in reducing urbna poverty, it is important to maintain steady, balanced economic growth, and persist in the experimentation with job training models.     

Household spending patterns and flow of ecotourism income into communities around Liwonde National Park,Malawi

Rural Malawi is largely characterised by high levels of poverty, unemployment and high population densities. It is also seen as the ‘warm heart of Africa’, which, together with its abundant natural resources, makes it an excellent destination for international ecotourists. This paper looks at the impact of ecotourism employment on poverty reduction and the flow of ecotourism income into the villages adjacent to Liwonde National Park. Extensive questionnaire surveys were conducted with staff employed in ecotourism as well as with rural households in the villages adjacent to the Park. Comparisons of household income and social welfare highlight the important role of ecotourism employment in lifting people in these rural villages above the poverty line. Household spending patterns illustrate the flow of income from ecotourism into the local economy and the important impact of this on local socio-economic development. Suggestions for increasing local multiplier effects of ecotourism are put forward.     

Price Dispersion and Accessibility: A Case Study of Fast Food

This study examines spatial variation in the price and accessibility of fast food across a major urban area. We use novel data on the price of a representative fast-food meal and the location of fast-food restaurants belonging to one of three major chains in the District of Columbia and its surrounding suburbs. These data are used to test a structural model of spatial competition. The results of this study are easily interpreted and compared with a past analysis. We find that spatial differences in costs and demand conditions drive variation in the number of firms operating in a market, which in turn affects prices.     

Racial/Ethnic Differences in the Effects of Psychiatric Disorders on Employment

Prior research on the disability burden of mental disorders has focused on the non-Latino white population, despite the growing size and importance of racial/ethnic minorities in the labor market and in the US population as a whole. This paper is one of the first to test for racial/ethnic differences in the effects of mental disorder on employment outcomes with data from the National Institute of Mental Health (NIMH) Collaborative Psychiatric Epidemiological Studies (CPES). We find that recent psychiatric disorder is associated with a reduction in the likelihood of employment for men of all racial/ethnic groups relative to non-Latino whites with the possible exception of Caribbeans. These findings are driven by the effects of anxiety and affective disorders. For females, only affective disorders appear to detract from employment overall. Much larger negative effects are found for Latino women with anxiety disorders.     

A conceptualisation of poverty in rural India

This paper investigates the different aspects of poverty in rural India. Based largely on data from a region of Bihar, the various characteristics and sources of poverty are enumerated and discussed, including food intake, other consumption, health, security, education and status as characteristics; and occupation, employment, wages, assets, organization and demographic factors as sources. It is argued that poverty must be seen as a multivariate phenomenon; policy to affect any one aspect of poverty is likely to be rendered ineffective by negative feedback from other variables in the poverty complex. Only a simultaneous attack on all aspects of poverty can be successful.     

China's War on Poverty: Assessing Targeting and the Growth Impacts of Poverty Programs

In this paper, we attempt to assess the effectiveness of China's Poverty Alleviation Programs in contributing to economic growth in poor areas. To meet this overall goal, we briefly describe China's poor area policy and examine how its leaders have implemented one of the developing world's largest poverty alleviation programs. Second, we examine whether or not the poverty programs have been implemented in the parts of China that are truly poor. Finally, we attempt to assess if the poverty programs have affected growth. The major findings are that China's poverty programs do get implemented in areas of the nation that are poor, but there are many poor areas that have been left out of the government's various programs. We also find that poverty programs contribute to economic growth and that economic growth promotes poverty reduction.     

The Effect of the Tipped Minimum Wage on Employees in the U.S. Restaurant Industry

According to federal law in 2013, employers can take a credit of up to $5.12 for tips received by workers in satisfying the minimum‐wage requirement of $7.25. This article uses interstate variation in laws regarding tip credits and minimum wages to identify the effects of reducing or eliminating the tip credit on employment, hours, and earnings in the U.S. restaurant industry. Using data from the Quarterly Census of Employment and Wages and the Current Population Survey, we find that a reduction in the tip credit increases weekly earnings but reduces employment in the full‐service restaurant industry and for tipped workers. The results are robust to controls for spatial heterogeneity in employment trends and are supported by a series of falsification tests.     

The determinants of poverty dynamics in Indonesia: evidence from panel data

We use the ‘spell’ approach to identifying poverty and apply an ordered logit model to examine the determinants of poverty dynamics in Indonesia, categorising households as poor, transient poor (–), transient poor (+) or non-poor. Observing the National Socio-Economic Survey (Susenas) balanced-panel data sets of 2005 and 2007, we found that 28% of poor households are classified as chronically poor (that is, remaining poor in two periods) while 7% of non-poor households are vulnerable to being transient poor (–). Our estimations confirmed that the determinants of poverty dynamics in Indonesia are educational attainment, the number of household members, physical assets, employment status, health shocks, the microcredit program, access to electricity, and changes in employment sector, employment status and the number of household members. We also found that households in Java–Bali are more vulnerable to negative shocks than those outside Java–Bali.     

Globalisation,poverty and corruption: Retarding progress in South Africa

ABSTRACT

Poverty and corruption can both immiserate a nation. Globalisation through open trade can potentially increase economic growth, providing employment and increased incomes to the poor. Corruption can dampen or even reduce these positive developments. Although globalisation is considered instrumental in development strategies, theoretically, the impact of globalisation on poverty reduction is ambiguous, an ambiguity that is also reflected in the empirical literature. The corruption-poverty literature clearly reveals that empirical findings on such association are at best heterogeneous. This article examines the effects of globalisation and corruption on poverty using time series data for South Africa for the period 1991–2016. Three indicators of poverty and recently developed measures of globalisation and corruption were employed in the logistic regression model used for estimation. The results confirm that globalisation reduces poverty while corruption intensifies it. The globalisation findings are robust across the different measures of poverty while unidirectional results show corruption increases poverty.