1. Shared-Growth and Job Creation: Exploring Employment and Shared Growth Linkages in Madagascar Margo Hoftijzer

2. Structure of presentation
Set-up of study
Main findings
Assessment of pilot
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

3. Set-up of Study
Exploring the role of labor as linkage between growth and poverty reduction
1. From growth to employment:
Linking changes in output p.c. to changes in labor productivity and employment (Shapley).
2. From labor productivity to earnings:
Linking changes in labor productivity to changes in earnings (macro-micro comparison).
3. From employment and earnings to poverty:
Linking changes in sectoral employment and earnings with those in poverty (Ravallion, Huppi).
Linking changes in labor income components to changes in poverty (Kakwani, Neri, Son)
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

4. A crisis-affected period (overall and sectoral annual output growth, %)
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

5. Basic indicators Population, employment and poverty (2001, 2005)
Population (mln)
15.9
17.9
Dependency rate (%)
0.91
0.89
Employment rate (%)
82.5
85.8
Unemployment rate (%)
1.2
2.6
GDP per capita ($)
247
233
Poverty rate (%)
rural
urban
69.7
77.3
44.2
68.7
73.5
52.0
Low earners (%)
44.1
33.8
Working poor (%)
69.2
65.4
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

6. Output per worker linked to GDP p.c. Shapley decomposition (2001-2005)
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

7. Inequality reduces Distribution of monthly earnings (2001,2005)
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

8. Median earnings (MGA):
Revealing sectoral developments Employment and earnings by sector (2001, 2005)
2001
2005
Employment share (%):
Δ %(#):
Primary sector
73.5
80.1
28.2
Secondary sector
6.8
2.5
-56.6
Tertiary sector
19.2
17.4
6.6
Median earnings (MGA):
Δ%:
24.2
31.6
30.6
83.6
80.0
-4.4
92.6
72.3
-22
Total median (mean)
35.3 (69.4)
30.8 (55.5)
14.6 (-20.0)
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

9. Employment and poverty Changes in employment differ by poverty level
(%)
Employment rate
Wage workers
Self-employed
Family laborers
Poor
- 2001
88.4
8.7
5.7
85.6
- 2005
88.7
10.8
4.1
85.2
Non-poor
71.7
39.8
13.7
46.5
80.8
22.7
9.2
68.2
Total
82.5
18.3
8.2
73.6
85.8
14.9
5.9
79.2
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

10. Household labor income by sector:
Income sources and consumption Changes in HH income sources differ by consumption level
Household labor income by sector:
Other
Total
(%)
Primary
Secondary
Tertiary
2001
64.8
7.9
21.9
5.4
100
Poorest
87.2
3.0
4.4 Q2
82.4
4.3
8.4
4.9 Q3
73.3
5.0
16.0
5.7 Q4
56.7
10.7
27.0
5.6
Richest
23.7
16.5
52.9
6.9
2005
70.7
3.5
21.4
81.0
1.9
12.6
4.5
77.1
2.1
17.8
76.2
16.9
3.9
68.8
3.6
23.0
4.6
50.6
6.8
36.6
6.0
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

11. Decomposing poverty reduction Inter and intra sectoral contributions
Inter-sectoral contributions
Residu
Change in Poverty
Primary
Second.
Tertiary
(P0)
-6.8
-0.4
3.1
7.0
-1.5
-0.5
-1.8
(P1)
-10.5
-0.3
1.2
3.7
-0.6
-0.2
-1.4
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

12. Sources of changes in labor income (average, per household, 2001-2005)
Poor
Non-Poor
Total
Household per capita labor income (% change) 29
-15 15
Contribution of changes in:
Average earnings per hour
143
141
138
Average hours worked
-27 24
-43
Household unemployment -4 12 -9
Household participation
-13
-77 14
(% change, geometric means across household)
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

13. Main findings
Fall in GDP per capita: associated with fall in labor productivity due to substantial labor influx into agriculture.
Fall in poverty incidence: due to higher employment in households just below the poverty line.
Fall in poverty depth: due to higher hourly earnings of the poor (higher primary, larger share of secondary and tertiary).
Fall in inequality: higher earnings of the poor, lower earnings of the non-poor.
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008

14. Assessment and next steps
Exploration of growth – labor – poverty linkages
Useful information for Madagascar
Illustrative for other countries
Link between labor productivity and labor income
Role of agricultural prices and products
More specific policy guidance for poverty reduction through labor
World Bank & CSAE - Shared Growth and Job Creation in Africa - March 2008