Macroeconomic Adjustment and the Poor: Analytical Issues and Cross-Country Evidence

58 Pages Posted: 22 Jul 2004

See all articles by Pierre-Richard Agenor

Pierre-Richard Agenor

University of Manchester - School of Social Sciences

Abstract

This paper studies the links between macroeconomic adjustment and poverty. The first part summarizes some of the recent evidence on poverty in the developing world. The second reviews the various channels through which macroeconomic policies affect the poor, whereas the third is devoted to the specific role of the labor market. It presents an analytical framework that captures some of the main features of the urban labor market in developing countries and studies the effects of fiscal adjustment on wages, employment, and poverty. The fourth part presents cross-country regressions linking various macroeconomic and structural variables to poverty. Higher levels and growth rates of per capita income, higher rates of real exchange rate depreciation, better health conditions, and a greater degree of commercial openness lower poverty, whereas inflation, greater income inequality, and macroeconomic volatility tend to increase it. Moreover, the impact of growth on poverty appears to be asymmetric; it seems to result from a significant relationship between episodes of increasing poverty and negative growth rates.

Keywords: Macroeconomic policy, poverty, labor markets

Suggested Citation

Agenor, Pierre-Richard, Macroeconomic Adjustment and the Poor: Analytical Issues and Cross-Country Evidence. Journal of Economic Surveys, Vol. 18, No. 3, pp. 351-408, July 2004. Available at SSRN: https://ssrn.com/abstract=565088

Pierre-Richard Agenor (Contact Author)

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

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