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Poverty, Income Distribution and Labour Market Issues in Sub-saharan Africa Stabilization Policies, Poverty and the Labour Market: Analytical Issues and Empirical Evidence

This paper discusses the various channels through which stabilization policies affect poverty in developing countries. It begins by reviewing someof the recent evidence on poverty rates, then provides ataxonomic review of the various channels through which macroeconomicpolicies affect the poor, with a particular emphasis on the role of thelabour market. The analytical framework capturessome of the main features of the urban labour market in developing countriesand studies the effects of fiscal adjustment on wages, employment andpoverty. It uses cross-country regressions linkingmacroeconomic variables and poverty rates. Although the results should betreated with care given the relatively short sample size, they suggest thatinflation has an adverse effect on poverty. The share of subsidies and othertransfers in proportion of government expenditure is significantlycorrelated with poverty only in sub-Saharan Africa. The last part discussesvarious research perspectives.