Thursday, March 24, 2005
[IWS] POOR BENEFIT MOST from ECONOMIC GROWTH (Cornell/ILR Study) [24 March 2005]
IWS Documented News Service
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Poor benefit most from economic growth, study from ILR School shows [24 March 2005]
http://www.news.cornell.edu/Chronicle//05/3.24.05/poor_benefit_most.html
Ain't nothing surer. The rich get richer and the poor get poorer," sang the Tin Pan Alley lyricists who wrote "Ain't We Got Fun" in 1921. Some economists think that's still true, but Cornell researchers Gary Fields and Maria Laura Sanchez Puerta aren't among them.
Their just-released study compared how the incomes of all sectors of Argentina's workforce changed over time. Their finding: The poor did better than the rich in both good and bad times.
Argentina's poorest workers enjoyed the largest changes in actual pesos -- not just in percentages -- compared with the wealthiest workers, their study showed. And the poor not only did better than the rich during the country's boom years from the mid-1990s to 1998, but also did better during the recession that lasted until 2002 and the recovery that followed. The findings will be useful to other developing countries in Latin America and around the world.
Fields is a professor of labor economics at Cornell's School of Industrial and Labor Relations and chair of the ILR School's Department of International and Comparative Labor. Sanchez Puerta is a Cornell doctoral student in economics from Argentina who will join the professional staff of the World Bank after she gains her degree.
Economists argue among themselves about whether economic booms benefit, bypass or harm the poor, said Fields. "In our study, 'Earnings Mobility in Argentina,' we looked at the changes for the same people from one year to the next from 1996 through 2003. The people whose income rose the most in pesos were the lower-income people, who benefited through better job opportunities and high self-employment earnings. It wasn't only certain poor people who benefited. It was widespread. The pattern found in our earnings mobility study was much more progressive than earlier inequality studies suggested."
The study also showed that the type of economic growth matters as much as the rate of growth, in terms of raising the incomes of the poor. "The faster growth takes place, the more the poor benefit," said Fields.
AND MORE....
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