The most important determinant of households’ livelihoods is how much they earn for their labour. People in informal work are more likely to be low earners, to live in poverty, and to make fewer transitions into the higher-paying work statuses. The paper is divided into three main sections: what we mean by informality and work status, why we should differentiate between work statuses, and what we can learn by analysing work statuses and transitions between them.

This paper focuses on employment and the labour market as a key mechanism leading from growth to poverty reduction in Africa. Given that the development goals are economy-wide outcomes—less poverty, shared prosperity, more and better job opportunities, etc.—the required analysis must be at the market level. Individual-level analysis is not enough. The paper brings together insights from labour economics and from development economics. It draws upon Fields’ work over decades at the intersection of these two fields. A concluding section presents suggestions for policy analysis.

Abstract This chapter outlines the content and scope of the book. Further, it sets out the intended intellectual contribution of the book. Using a range of countries from the Global South, the book examines heterogeneity within informal work by applying a common conceptual framework and empirical methodology. The country studies use panel data to study the dynamics of worker transitions between formal and heterogeneous informal work. The range of country studies are drawn from Asia, Latin America, the Middle East and North Africa, and sub-Saharan Africa. A key contribution of the book is that it offers a more nuanced view of informality that differentiates not only between formal and informal, self-employed, and wage-employment but also between upper-tier and lower-tier informality.

Income changes in an economy are usually assessed through the changes over time in cross-sectional variables such as economy-wide inequality. An alternative is to use panel data to gauge income changes among identified income recipients. In this article, we analyze these two approaches taken together, each measured in multiple ways. We establish that under specific conditions, it is impossible to have falling inequality together with divergent panel income changes. We also provide conditions explaining when rising inequality can arise together with convergent panel changes. We provide the intuition behind these results and show when such results fail to hold.

This paper provides empirical evidence on patterns of earnings mobility for China for the 2000s and before to study how the labor market reform in the late 1990s affects individuals' earnings mobility. We find convergent earnings mobility in the 1990s but clearly divergent earnings mobility in the 2000s, meaning that those with the highest earnings to begin with experienced the largest earnings gains after 2000. Policies would be desirable such as compensating low-skill workers by establishing government-initiated training programs. More generally, welfare pol-icies are necessary to help disadvantaged workers avoid from low-income or poverty traps who suffer from negative shocks in market-oriented reforms.

Pro-poor growth refers to how incomes change for the poor and for otherswhen economic growth occurs. Dualistic development refers to three typesof economic growth patterns in a two-sector economy: 1) modern sectorenrichment, 2) traditional sector enrichment, and 3) modern sectorenlargement. The question asked in this article is, what can we say aboutthe pro-poorness of each of the three types of dualistic development? Themain conclusion I reach is that pro-poor growth works well for the first twodualistic growth types but runs into some difficulties for the third. Toovercome these problems, I posit some axioms for dualistic development –particularly, by treating pro-richness and pro-poorness as distinct orderings.

This chapter has two purposes. The first is to define clearly different social mobility concepts and components. The second is to embed these concepts and components into a larger context of social mobility research. The core of the chapter develops six mobility concepts and their measures as well as six macromobility components and their measures. The next section relates these concepts and components to issues in the mobility literature. The chapter concludes with a checklist of suggestions for conducting and presenting social mobility research: being explicit about several preliminaries—outcome of interest, context, and level of analysis—and then four steps—question, mobility concept(s), mobility measure(s), and empirical findings.

The present paper constructs a two-sector labor market model for China featuring endogenous internal labor mobility and heterogeneous costs of migration induced by the Chinese household registration system (hukou). The main novelty of our model is to divide migrants into those with more family responsibilities and those with fewer to explain the empirical fact that almost all young people with rural hukou have migrated to cities, while people who stay in the rural area are older and have more family responsibilities. We conduct two policy experiments using the model: one experiment concerned with reducing costs of living for younger migrants and the other for older migrants. The main results are that the first policy would unambiguously increase social welfare, while the reduced-cost policy for older migrants would reduce poverty and inequality although some urban natives may experience a wage reduction.

A key way for the world’s poor—nearly half of humanity—to escape poverty is to earn more for their labor. Most of the world’s poor people are self-employed, but because there are few opportunities in most developing countries for them to earn enough to escape poverty, they are working hard but working poor. Two key policy planks in the fight against poverty should be: raising the returns to self-employment and creating more opportunities to move from self-employment into higher paying wage employment.

Excerpt] In this paper, we shall present a formal theoretical mode with which to analyze the equilibrium allocation of the labor force between labor markets. Our basic premise is that the same kinds of forces that explain the choices of workers between the rural and urban sectors can also explain their choices between one labor market and another within an urban area and are probably made simultaneously. The decision-makers -be they individuals or family units are presumed to consider the various labor market opportunities available to them and to choose the one which maximizes their expected future income.

This paper has two purposes. The first is to define clearly different social mobility concepts and components. The second is to embed these concepts and components into a larger context of social mobility research. The core of the paper develops six mobility concepts and their measures as well as six macromobility components and their measures. The next section relates these concepts and components to issues in the mobility literature. The paper concludes with a checklist of suggestions for conducting and presenting social mobility research: being explicit about several preliminaries—outcome of interest, context, and level of analysis—and then four steps—question, mobility concept(s), mobility measure(s), and empirical findings.

The chapter presents an analysis of the employment and unemployment outcomes facing them and people like them. Despite high-sounding pronouncements such as Article 23 of the United Nations’ Universal Declaration of Human Rights, for billions of working persons around the world, the rights “to work, to free choice of employment, to just and favourable conditions of work … to protection against unemployment … and to just and favourable remuneration” are unattainable; they are not rights at all.

In the literature, much attention has been paid to a number of aspects of inequality including the distinction between relative and absolute inequality, axiomatization of inequality, the Lorenz criterion for inequality comparisons, properties of various inequality measures, and inequality decomposition. In no way do I wish to argue with the main results derived in these areas. Rather, my purpose here is to add to the theory of inequality measurement by dealing with one aspect of inequality which has been largely ignored by economists and by others. This is the question of how inequality changes – in particular, whether it increases, decreases, or remains unchanged – when income grows in specified ways. The balance of this chapter deals with two distinct conceptual entities, “inequality” and “inequality measures.” The next section analyzes how “inequality” might be said to change under various types of economic growth and explores the foundations for alternative views. One approach in terms of “elitism of the rich” and “isolation of the poor” is then described. The following section looks into the behavior of “inequality measures” and the relationship between “inequality measures” and “inequality,” and a final section draws some conclusions.

Of the world’s 6.7 billion people (as of 2008), 1.3 billion lived on less than $1.25 Purchasing Power Parity dollars per person per day and another 1.7 billion lived on between $1.25 and $2.50 PPP dollars. The scourge of absolute economic misery among billions of the world’s people is one of the most serious problems facing humankind today. Unemployment (defined below) befalls about 200 million of the world’s people - a sizeable number but small compared to the three billion people who are poor using the $2.50 PPP dollar poverty line. A much larger number – 900 million – are employed but earning so little that they and their families are unable to reach even $2 per person per day. They are working hard and they are the working poor. To achieve more and better employment (where “better” depends on such factors as rate of pay, job security, employment protections, and type of work), analysts and donors need to understand better how employment, growth, poverty, and other factors interact, how unemployment is caused, and how employment can be improved. At the same time, drawing on practical experience, research can identify knowledge gaps that to date pose limits to successful employment creation policy.

The purpose of this chapter is to assess the compatibility between theoretical models of the urban informal sector (UIS) and empirical evidence on the workings of that sector in the context of developing countries’ labour markets. The major point is that, although the UIS is an excellent idea which has served us well in the 1970s and 1980s, there is a need in the next round of research to refine the terminology and the models in light of empirical findings which have come to the fore in the interim. Wage employment or self-employment in small-scale units may be better than or worse than employment in the formal sector. This is not a new point: diversity of earning opportunities and other job characteristics within the informal sector has long been noted. But only recently has this view come to the fore.

The world contains 1.3 billion desperately poor people who subsist on less than one U.S. dollar per person per day, and another 1.7 billion who live on between one and two U.S. dollars per person per day. With such low incomes, they are unable to attain a minimal standard of living, as gauged by access to adequate food, clothing, shelter, clean water, sanitation facilities, education, and health services. The world’s billions of poor live on the “margin of life” – their material well-being, their happiness, and even, in the most severe cases, their very existence hanging in the balance

Janneke Pieters Most people derive most if not all of their income from the work they and other family members do. It follows that, to assure that economic development reaches the poor, development efforts must be targeted on improving employment and earnings of low-income households....