Unemployment-Poverty Trade-Offs

51 Pages Posted: 20 Apr 2016

See all articles by Pierre-Richard Agenor

Pierre-Richard Agenor

University of Manchester - School of Social Sciences

Date Written: May 6, 2004

Abstract

Agenor examines the potential trade-offs that may arise between poverty alleviation and unemployment reduction. He discusses various analytical arguments that may provide a rationale for their existence, and uses three alternative methodologies to assess their relevance: a vector autoregression framework (which is applied to Brazil and Chile), cross-country regressions, and simulations with a structural macro model linked to a household survey. Impulse response functions to output and wage shocks indicate no short-run tradeoff. between unemployment and poverty. By contrast, regression results, which control for a variety of determinants of poverty rates across countries, suggest that such a trade-off may indeed exist. Simulations with the structural model show that labor market reforms may induce both short- and long-run trade-offs between the composition of unemployment and the incidence of poverty among household groups.

This paper - a product of the Poverty Reduction and Economic Management Division, World Bank Institute - is part of a larger effort in the institute to understand the links between unemployment reduction and poverty alleviation.

Suggested Citation

Agenor, Pierre-Richard, Unemployment-Poverty Trade-Offs (May 6, 2004). World Bank Policy Research Working Paper No. 3297. Available at SSRN: https://ssrn.com/abstract=610342

Pierre-Richard Agenor (Contact Author)

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

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