Labor markets as a transmission channel from growth to poverty reduction: Evidence from Vietnam and Burkina Faso, 1993-2003

Employment is widely perceived as being amongst the most important channels for translating growth into poverty reduction. This paper focuses on two countries, Burkina Faso and Vietnam, with very distinct patterns of growth and poverty reduction between 1993-2003. We use household survey data to examine how employment transmitted growth to the poor in these two countries and find that there are two important factors that maximize the effectiveness of this transmission channel: (1) an increase in labor productivity that is (a) broad based and (b) concentrated in sectors where the poor are disproportionately employed or to which they have access, and (2) strong (domestic and foreign) demand for the goods and services produced by the poor, and access to these markets