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Tackling Inequalities in Brazil, China, India and South Africa

The Role of Labour Market and Social Policies

image of Tackling Inequalities in Brazil, China, India and South Africa

Greater integration into the world economy and important policy reforms have resulted in Brazil, China, India and South Africa becoming major actors in the globalisation process, with impressive results in terms of economic growth, social development and poverty reduction. But the benefits of stronger growth have not always been shared equally and income inequality has remained at very high levels. 

Existing evidence suggests that the evolution of the distribution of income in these four countries is the result of many forces. These include demographic change, migration, unequal access to education, informal employment, existing regulations and their enforcement, social norms and cultural legacy. These forces are often interlinked and reinforce one another. However, as employment is the primary source of income for most households, understanding the impact of labour market outcomes is crucial.  

This book focuses on the role of growth and employment/unemployment developments in explaining recent income inequality trends in Brazil, China, India and South Africa, and discusses the roles played by labour market and social policies in both shaping and addressing these inequalities. It includes the papers presented at the joint OECD and European Union High-Level Conference on Inequalities in Emerging Economies held in Paris in May 2010. This work is part of OECD’s ongoing dialogue and co-operation with non-member economies around the world.

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What role for policies in tackling inequality?

In recent years, the BCIS governments have incorporated the goal of reducing poverty and inequality into their approaches to more sustainable growth and have enacted some reforms in that direction. Tackling inequality traps requires improving economic opportunities for all, and this covers a variety of policy actions. Labour market and social policies have an important role to play, as they directly or indirectly affect household incomes. In countries with significant labour market segmentation between formal and informal employment, policies and measures directed exclusively at the formal labour market have a small influence, limiting their impact on reducing poverty and inequality. But, labour market policies can have a considerable impact on maintaining this labour market duality by making employment expensive and favouring underemployment and informality. In this kind of configuration, they could even become counterproductive with respect to reducing poverty and inequality.

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