One of the most enlightening aspects of my time as a competition regulator in the UK was learning what a wide range of businesses actually do – set prices, deal with suppliers etc. – after so many years generalising about it. Economists are prone to overly-abstract analysis without the interesting detail.
It is the detail combined with analysis that makes [amazon_link id=”0199794642″ target=”_blank” ]Working Hard, Working Poor: A Global Journey[/amazon_link] by Gary S Fields a terrific book. He describes from experience in several countries what it is that keeps poor people poor, the 3.1 billion globally who live on less than PPP US$2.50 a day.
In a nutshell, the answer is ultra-low pay for their hard work and long hours. Reducing poverty therefore depends on finding ways to increase their earnings – although, as the introduction points out, jobs and earnings are notable by their absence from the Millennium Development Goals, and the labour market in general absent from consideration in development economics.This is a striking gap when you consider that labour market success, in one way or another, is precisely how hundreds of millions of people have escaped poverty over the years; or indeed how much we focus on assisting the working poor in the western countries through income-supporting policies such as the EITC/Working Families Tax Credit.
The specific reasons for low pay differ from place to place. For the rural poor, the productivity of their farming is low, often because they do not have the savings or credit to buy equipment. They may also receive low prices for their produce, or be unable to sell directly in the market because of the need for a licence or to pay a bribe. For those in urban areas, relatively few of the very poor work in jobs, and one path out of poverty would require economic reforms to reduce barriers to the creation of formal jobs. As the author points out, the people working in factories like Foxconn’s in China have better pay and conditions than many of their compatriots. The majority of very poor people who are self-employed need to earn more from their work, almost always in the informal sector, and this will depend on context. In India, organisation in a union helped increase the pitiful earnings of women rolling bidis in their slum homes. Some training or access to loans would help others, as would reducing bureaucratic hassle, and enabling small-scale franchising.
Still, I hesitate to generalise about a book whose value lies in its specificity. It’s a short book, nicely written. It is highly suitable for students taking development economics courses. But anyone with an interest in global poverty should read it too, for the window on the lives of real people, their stories told in a matter-of-fact and non-patronising way. It joins [amazon_link id=”0691148198″ target=”_blank” ]Portfolios of the Poor[/amazon_link] as one of the most useful books I’ve come across in this field. Highly commended.
[amazon_image id=”0199794642″ link=”true” target=”_blank” size=”medium” ]Working Hard, Working Poor: A Global Journey[/amazon_image]