Jump to ContentJump to Main Navigation
Growth, Employment, and Poverty in Latin America$

Guillermo Cruces, Gary S. Fields, David Jaume, and Mariana Viollaz

Print publication date: 2017

Print ISBN-13: 9780198801085

Published to Oxford Scholarship Online: June 2017

DOI: 10.1093/oso/9780198801085.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a monograph in OSO for personal use (for details see www.oxfordscholarship.com/page/privacy-policy).date: 22 October 2018

Bolivia

Bolivia

Chapter:
(p.161) 8 Bolivia
Source:
Growth, Employment, and Poverty in Latin America
Author(s):

Guillermo Cruces

Gary S. Fields

David Jaume

Mariana Viollaz

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198801085.003.0008

Abstract and Keywords

During the 2000s, Bolivia experienced moderate economic growth and improved all labour market indicators. The economy suffered a slowdown as a consequence of the international crisis of 2008, but Bolivia sustained positive growth rates during that episode. The unemployment rate fell between 2000 and 2012. The composition of employment by occupational groups, occupational positions, economic sectors, and educational levels improved, and the share of registered workers increased. The chapter shows that all poverty and inequality indicators decreased substantially between 2000 and 2012. The only negative impact of the international crisis of 2008 was an interruption in the declining trend of unemployment.

Keywords:   Bolivia, economic growth, labour market indicators, unemployment, employment, education

8.1 Introduction

This chapter on labour markets and growth in Bolivia since 2000 is one of sixteen studies of Latin American countries, each of which analyses the growth–employment–poverty nexus and aims to answer the following broad questions: Has economic growth resulted in economic development via improved labour market conditions in Latin America in the 2000s, and have these improvements halted or been reversed since the Great Recession? How do the rate and character of economic growth, changes in the various labour market indicators, and changes in poverty relate to each other?

To answer these questions, we analyse the growth experience of Bolivia during the 2000s and a wide set of labour market indicators that we assign to one of two different categories: employment and earnings indicators, and poverty and income inequality indicators. More specifically, for the group of employment and earnings indicators we construct statistics on the following variables: the unemployment rate; the employment structure by occupational group, employment position, economic sector, registration of workers with the social security system, and educational level; and mean labour earnings and hourly wages. We present all these indicators for the employed population as a whole and for different population groups (youth, adults, men, and women). For the group of poverty and income inequality indicators, we compute poverty rates using the official moderate and extreme poverty lines and the international lines of 2.5 and 4 dollars a day. We also calculate the Gini coefficient of household per capita income and labour earnings.

All the statistics in this chapter are obtained using microdata from the Encuesta Continua de Hogares (ECH) for the years 2000 and 2003–4 and the Encuesta de Hogares (EH) for the years 2001, 2002, and 2005 to 2012. The nationwide surveys were processed following a harmonization methodology and incorporated into the SEDLAC—Socio-Economic Database for Latin (p.162) America and the Caribbean (CEDLAS and World Bank 2014).1 The resulting labour market indicators were compiled into a large number of tables and figures, which are available in an earlier version of this study (henceforth, Cruces et al. 2015). Chapter 1 of this book provides the definition for each of the indicators we analyse here, while Cruces et al. (2015) includes details on definitions and classification systems used by Bolivia’s household surveys, and on comparability issues of these surveys over time.

8.2 Economic Growth

Bolivia experienced moderate economic growth from 2000 to 2012. The economy suffered a slowdown as a consequence of the international crisis of 2008, but GDP and GDP per capita growth rates were nonetheless positive in 2009. (Cruces et al. 2015: figures 1 and 2)

During the period 2000–12, Bolivia experienced moderate economic growth by Latin American standards. GDP per capita increased by 30.5 per cent, while the average for the eighteen Latin American countries was 36.2 per cent during the same period. GDP (measured in PPP dollars of 2005) grew by 61.2 per cent, and GDP per employed person rose by 16.8 per cent. The annual growth rate of GDP per capita was 2.1 per cent, and it varied from a minimum of −0.4 per cent in 2001 to a maximum of 4.6 per cent in 2008 (Table 8.1).

Table 8.1 Bolivia: Evolution of growth and labour market indicators over the 2000s

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Growth Indicators

GDP per capita

3,488

3,476

3,492

3,518

3,596

3,688

3,799

3,907

4,081

4,151

4,252

4,400

4,552

Bolivia

GDP per capita growth rate

0.42

-0.35

0.47

0.74

2.24

2.56

3.01

2.85

4.45

1.71

2.45

3.46

3.45

Bolivia

Employment and Earnings Indicators

Employment-to-population ratio

66.95

70.51

68.94

70.02

66.38

69.47

67.53

69.94

69.97

70.27

67.08

Bolivia

Unemployment rate

5.90

6.50

5.76

5.80

7.05

6.53

6.85

4.62

4.81

4.12

3.91

Bolivia

Share of low-earnings occupations

61.77

63.90

63.61

60.56

59.48

56.03

57.33

58.11

55.91

56.43

56.01

Bolivia

Share of mid-earnings occupations

33.53

29.43

29.75

33.85

33.20

34.54

33.32

33.90

35.39

32.50

32.33

Bolivia

Share of high-earnings occupations

4.71

6.67

6.64

5.58

7.32

9.42

9.35

7.99

8.70

11.07

11.66

Bolivia

Share of employers

2.06

2.41

4.79

5.16

5.70

4.81

5.82

6.18

5.13

5.79

6.79

Bolivia

Share of wage/salaried employees

33.10

34.89

33.04

37.39

36.06

36.61

39.28

38.96

41.78

39.50

40.67

Bolivia

Share of self-employed workers

44.74

39.52

39.43

38.99

38.13

37.48

36.04

35.58

35.36

36.53

38.34

Bolivia

Share of unpaid family workers

20.11

23.18

22.74

18.45

20.11

21.10

18.85

19.29

17.73

18.19

14.20

Bolivia

Share of workers in low-earnings sectors

62.12

65.31

63.47

60.18

59.35

55.75

56.62

57.00

54.19

55.71

55.54

Bolivia

Share of workers in mid-earnings sectors

26.97

23.84

26.64

28.97

28.58

28.95

29.56

28.09

31.35

29.03

28.10

Bolivia

Share of workers in high-earnings sectors

10.91

10.85

9.89

10.86

12.07

15.31

13.82

14.91

14.46

15.26

16.36

Bolivia

Share of low educated workers

60.05

59.64

61.33

59.36

55.94

56.04

50.84

50.26

48.15

45.91

43.17

Bolivia

Share of medium educated workers

26.60

26.35

26.84

28.86

29.81

30.84

31.86

34.95

35.08

33.59

35.07

Bolivia

Share of high educated workers

13.35

14.02

11.83

11.78

14.25

13.12

17.30

14.79

16.77

20.50

21.76

Bolivia

Share of workers registered with SS

12.29

11.85

9.66

10.47

19.83

18.73

13.65

13.03

14.89

17.44

18.06

Bolivia

Mean labour earnings

447.3

415.4

435.7

443.6

471.0

498.9

466.1

503.6

530.9

573.8

589.3

Bolivia

Poverty and Inequality Indicators

Official extreme poverty rate

42.2

30.8

36.3

27.4

32.4

29.1

31.1

26.0

22.6

17.8

18.7

Bolivia

Official moderate poverty rate

65.0

56.4

60.0

53.6

56.4

53.1

55.2

52.5

47.1

40.8

39.1

Bolivia

Poverty rate 2.5 dollars-a-day

43.25

34.72

39.70

30.50

34.81

32.00

30.29

22.84

20.64

16.19

17.05

Bolivia

Poverty rate 4 dollars-a-day

59.90

53.61

57.75

51.43

53.58

48.52

47.43

40.41

35.14

29.16

29.49

Bolivia

GINI of household per capita income

0.619

0.549

0.600

0.549

0.583

0.567

0.553

0.514

0.494

0.462

0.465

Bolivia

GINI of labour earnings

0.594

0.559

0.574

0.529

0.563

0.539

0.536

0.508

0.495

0.454

0.467

Bolivia

Note: The shaded labour market indicators’ figures represent statistical significant improvements at 5 per cent between the initial and final years for all the employment and earnings indicators and poverty and inequality indicators. The only exceptions are the share of mid-earnings occupations, share of mid-earnings sectors and share of medium-educated workers for which we did not assign welfare evaluation criteria.

Source: SEDLAC (CEDLAS and World Bank 2014) and World Development Indicators (World Bank 2014).

Most of the GDP growth took place in the second half of the period. At the beginning of the 2000s, Bolivia experienced low economic growth. Between 2000 and 2002, economic activity was sluggish due to a real exchange rate appreciation and a series of negative shocks such as the intensified coca eradication, the devaluation in Brazil, and the crisis in Argentina (IMF 2006). GDP growth averaged 2.2 per cent a year and GDP per capita growth rate was only 0.2 per cent annually. Starting in 2003, economic activity recovered, led by hydrocarbon and mineral exports. There was an increase in both export volumes—the result of large investments in hydrocarbon and mining sectors—and commodities prices. The royalty rate paid on hydrocarbon production also increased due to the new Hydrocarbon Law of 2005, which led to a large increase in fiscal revenues. Moreover, Bolivia benefited from a significant reduction in its external public debt and the increase of remittances by Bolivian nationals who had migrated abroad (Cali and Jemio 2010).2 The large (p.163) (p.164) (p.165) accumulation of international reserves and significant fiscal surpluses contributed to turn Bolivia into a net external creditor (IMF 2010).

The international crisis of 2008 led to an important reduction in export prices, causing a drop in export incomes, fiscal revenues, and economic activity (Jemio and Nina 2010). However, the impact of the Great Recession on Bolivia was milder than in other Latin American countries. In fact, Bolivia was one of few countries in Latin America that sustained positive growth during the global crisis of 2008. GDP growth slowed from 6.2 per cent in 2008 to 3.4 per cent in 2009, and GDP per capita growth from 4.5 per cent to 1.7 per cent. Prudent fiscal policies during the boom allowed a sizable portion of the hydrocarbon revenue to be saved, improving the resilience of the economy to adverse external shocks (IMF 2014). The government implemented a moderately countercyclical policy to support domestic demand during the international crisis. Moreover, the financial system was barely affected due to its limited integration with international capital markets (IMF 2010). The reduction in commodity prices was only temporary, allowing the recovery of the growth rates. By 2011, GDP and GDP per capita growth rates surpassed their pre-crisis levels.

8.3 Unemployment

The 2000–12 period witnessed a drop in the unemployment rate, which was not tightly correlated to GDP growth. The unemployment rate fell for all population groups over the period. The international crisis of 2008 led to an interruption of the overall downward trend in the unemployment rate. (Cruces et al. 2015: figure 3)

The unemployment rate (measured as the ratio of unemployment to labour force) decreased from 5.9 per cent in 2000 to 3.9 per cent in 2012 (Table 8.1). The decline in the unemployment rate was explained both by the entry of persons into the labour market (the number of persons in the labour force grew by 1,199,094 from 2000 to 2012) which mimicked the upward trend of the working-age population, and by the reduction in the number of unemployed people (reduction of 24,909 persons). The reduction in the unemployment rate was not monotonic over the period. The unemployment rate suffered an initial increase followed by a reduction between 2001 and 2003–4, while GDP was increasing, increased, and remained at the highest level of the period between 2005 and 2007 (around 6.8 per cent) when GDP was growing rapidly, and declined in the following years with a small interruption during the international crisis of 2008 (17,122 new unemployed (p.166) people between 2008 and 2009). The increase in the unemployment rate between 2005 and 2007 was related to the export-based growth process of Bolivia, as the mining and hydrocarbon sectors—main export products of the country—are capital-intensive (Muriel and Jemio 2010).

Between 2000 and 2012, the unemployment rate decreased for all population groups. Young workers, adults, men, and women suffered an increase in their unemployment rates between 2005 and 2007. All population groups recovered the downward trend in the following years with an interruption during the international crisis of 2008 only for adult workers and men.

8.4 Job Mix

The composition of employment by occupational group improved between 2000 and 2012 as workers moved from elementary and agricultural, forestry and fishery occupations to better paying occupations like management and professional jobs. All demographic groups—young and adult workers, men and women—benefited from the improvement in the occupational composition of employment over the period. The international crisis of 2008 did not affect the improving trend.(Cruces et al. 2015: figure 4)

The share of the following occupations shrank between 2000 and 2012: agricultural occupations (drop of 9.6 percentage points); crafts and trades occupations (drop of 2.9 percentage points); and technical and associate professional occupations (drop of 1.7 percentage points). The share of the following occupations grew: professional (increase of 6.7 percentage points); services and sales workers (increase of 4.3 percentage points); and plant and machine operators (increase of 3.1 percentage points). The share of the other occupational groups remained largely unchanged. These changes in the occupational composition of employment can be interpreted as an improvement since low-earning occupations (agricultural, elementary, and services and sales occupations) reduced their share in total employment by 5.8 percentage points between 2000 and 2012, while high-earning occupations (management, armed forces, and professionals) gained share in total employment (increase of 7.0 percentage points). These changes resulted in a slight reduction in the share of mid-earning occupations (technicians and associate professionals, plant and machine operators, clerical, and craft and related trade jobs) in total employment (Table 8.1).

Improvements in the occupational composition of employment between 2000 and 2012 were observed for young and adult workers, and for men and women.

(p.167) The international crisis of 2008 did not affect adversely the improvement in the composition of employment by occupational group. Between 2008 and 2009 the share of low-earning occupations fell in the aggregate and for all population groups, while the share of high-earning occupations increased overall and for young, adult workers, and women. For men, though, a reduction in the share of high-earning occupations resulted in an increase in the share of mid-earning occupations during the international crisis. That share reached and surpassed the pre-crisis level by 2011.

The employment structure by occupational position improved from 2000 to 2012 as the share of wage/salaried employees and employers in total employment increased and the share of self-employed and unpaid workers decreased. The improving trend in the employment structure by occupational position was experienced by all population groups. The international crisis of 2008 did not affect adversely the improvement in the structure of employment by occupational position overall, for adult workers, men, and women, but led to a worsening for youth. (Cruces et al. 2015: figure 5)

The structure of employment by occupational position changed over the period. In 2000 the largest category was the self-employed (44.7 per cent of total employment) followed by wage/salaried employees (33.1 per cent). By 2012, the position of these categories reversed and the largest was wage/salaried employees (40.7 per cent of total employment) followed by the self-employed (38.3 per cent) (Table 8.1). The share of unpaid workers decreased over the period from 20.1 per cent of employed persons in 2000 to 14.2 per cent in 2012, while the share of employers increased from 2.1 per cent in 2000 to 6.8 per cent in 2012. These changes in the structure of employment by occupational position can be interpreted as an improvement due to the fall in the share of low-earning categories (self-employment and unpaid workers) and the increase in the share of high-earning categories (wage/salaried employees and employers). The employment structure by occupational position improved during 2000–12 for all population groups (young and adult workers, men and women).

The international crisis of 2008 did not reverse the improvements that had been taking place for the employed labour force overall, and for adults, men, and women, but led to a worsening for young workers. The share of wage/salaried employees increased between 2008 and 2009 while the share of unpaid workers and self-employed fell. Only one occupational position indicator—the share of employers in total employment—moved in the worsening direction in 2009, but it immediately began to improve again. When we disaggregate, we find that the improving trend in the structure of employment by occupational position continued without pause in 2009 for adult workers, men, and women. For young workers, though, there was a (p.168) break in the tendency described before. An increase in the share of self-employed workers and a decrease in the share of wage/salaried employees took place between 2008 and 2009. In the context of a slowdown in the economic activity, young workers in Bolivia resorted to self-employment as a strategy to continue being employed. The share of self-employed workers was again declining by 2012.

The employment composition by economic sector improved over the course of the period studied overall and for all population groups. The international crisis of 2008 did not interrupt the decreasing trend in the share of employment in low-earning sectors, but led to a reduction in the share of high-earning sectors in total employment and an increase in the share of employment in mid-earning sectors. (Cruces et al. 2015: figure 6)

The period 2000–12 witnessed a reduction (from 62.1 per cent to 55.5 per cent) in the share of workers in low-earning sectors (domestic service, primary activities, and commerce). Workers employed in the mining and hydrocarbon subsectors are included in the primary activities sector in our classification. The increase in the employment share of the capital-intensive mining and hydrocarbon subsectors over the period in Bolivia was counteracted by the reduction in the employment share of the labour-intensive agricultural subsector. Interestingly, besides the reduction in the share of low-earning sectors in total employment over the period, these sectors accounted for more than half of the total employed population of the country by 2012. There was, during the same period, an increase (from 10.9 per cent to 16.4 per cent) in the share of high-earning sectors (public administration, skilled services, and utilities and transportation) in the total. These changes resulted in a slight increase in the share of mid-earning sectors (industry, construction, education, and health) in total employment (Table 8.1).

The employment composition by economic sector improved between 2000 and 2012 for young and adult workers, men and women, as they moved from low-earning sectors to high-earning sectors.

The international crisis of 2008 did not halt the downward trend in the share of low-earning sectors overall and for all population groups, but led to a reduction in the share of high-earning sectors in total employment that impacted mainly young workers and resulted in an increase in the share of mid-earning sectors in total employment. Adults and men surpassed their pre-crisis share of high-earning sectors in total employment by 2011, while for young workers and women that happened in 2012.

The educational level of the Bolivian employed population improved steadily over the period for all population groups, and especially among young workers. The improving trend was not impacted adversely by the international crisis of 2008. (Cruces et al. 2015: figure 7)

(p.169) The share of employed workers with low educational levels (eight years of schooling or less) dropped from 60.1 per cent in 2000 to 43.2 per cent in 2012, while the share of workers with medium and high educational levels (nine to thirteen years of schooling and over thirteen years of schooling) grew from 26.6 per cent in 2000 to 35.1 per cent in 2012 and from 13.4 per cent to 21.8 per cent respectively (Table 8.1).3 We interpret this result as an improvement for the employed population as the level of education is an important predictor of labour earnings. Consequently, the changes in the employment structure by educational level implied an increase in the share of workers that tend to have high levels of earnings and a decline in the share of workers with low earnings levels.4 The educational level of the employed population improved between 2000 and 2012 for all groups and especially for young workers. The pattern of improvement in the level of education of the employed population in Bolivia continued even during the international crisis of 2008, overall and for all population groups.

The overall share of workers registered with the social security system increased between 2000 and 2012, though erratically. The improvement also took place among all population groups, especially adult workers and women. The international crisis of 2008 did not affect the upward trend of the registration rate. (Cruces et al. 2015: figure 8)

The social security system in Bolivia is composed of the short-term Mandatory Social Insurance (Seguro Social Obligatorio) and the Long-Term Social Insurance (Seguro Social de Largo Plazo). The short-term Mandatory Social Insurance covers health, life, and work contingencies. It provides medical services (attention for the affiliated members and their families), as well as in-kind and cash transfers. The Long-Term Social Insurance covers disability, old age, and death, and it is an individual capitalization system. The affiliation to this insurance is mandatory for all dependent workers and voluntary for independent workers. Besides the individual capitalization system, a non-contributory universal pension—Bonosol—was implemented in the 1990s for all Bolivians aged 65 or more. In 2008, the Bonosol was replaced by the Renta Dignidad, which covers all Bolivians aged 60 or more with reduced benefits for those receiving any other pension (Monterrey Arce 2013).

(p.170) Social security records show an increase in the percentage of employed workers registered with the contributory scheme of the system between 2000 and 2012, from 12.3 per cent in 2000 (452,194 registered workers) to 18.1 per cent in 2012 (542,843 registered workers) (Table 8.1). The changes were erratic. From 2000 to 2002 the percentage of workers registered with the social security system decreased; it increased between 2002 and 2005 and fell again up to 2008. From 2009 onwards, the share of employed workers registered with the social security system increased steadily. Thus, the employed population in Bolivia has been largely informal (unregistered)—just 14.5 per cent registered over the period. Among the reasons for workers not contributing to the individual capitalization system, ignorance about how the system works and lack of economic resources are the most important (Wanderley 2009). The rate of registration with the social security system increased for all population groups (young and adult workers, men, and women).

The overall percentage of workers registered with the social security system continued to grow during the international crisis of 2008. Disaggregating, the rate of registration also continued to increase for adult workers, men, and women. For young workers, though, the rate of registration slightly decreased in 2009. This fact is in accord with our previous evidence of increase in the share of self-employment—an employment category where the registration with social security is typically low—among young workers during the international crisis.5 By 2011 it recovered the pre-crisis level and resumed the upward trend.

8.5 Labour Earnings

Labour earnings increased between 2000 and 2012. Within the period, there was a reduction in the early years of the period, a steady increase during 2002–06, a fall in 2007, and an upward trend in the following years. Workers were not affected negatively by the 2008 crisis. Labour earnings increased overall, for young and adult workers, and for men and women. The evidence of earning changes by employment categories over the period indicates that labour earnings increased for low-earning categories and tended to decrease for high-earning categories.(Cruces et al. 2015: figure 9)

Average monthly earnings, expressed in dollars at 2005 purchasing power parity (PPP), increased by 31.8 per cent, from US$447 in 2000 to US$589 in 2012 (Table 8.1). Labour earnings fell at the beginning of the period—2000–1—and rose in most years after that. The upward trend was interrupted (p.171) in 2007 when labour earnings fell by 10.1 per cent. In 2008, real earnings resumed their upward trend. Starting in 2006, the government implemented continuous increases in the minimum monthly earning. Real earnings increased even more than the growth in minimum wages and the percentage of workers earning less than the minimum monthly earnings decreased, while the percentage of workers earning more than three times the minimum monthly earnings increased (Canavire-Bacarreza and Rios-Avila 2015). Disaggregating, we find that men and women, and young and adult workers all increased their labour earnings between 2000 and 2012. The trend in their labour earnings reflected the erratic overall time path.

Mean earnings rose between 2000 and 2012 in low-earning categories and tended to fall in high-earning categories. Among occupational groups, agricultural, forestry, and fishery workers, workers in elementary occupations, and services and sales workers had an average increase in their labour earnings. Workers in management, armed forces, and professionals suffered an earning reduction. When the working population is broken down by occupational positions, the self-employed had an increase in labour earnings, while employers and paid employees slightly increased their labour earnings over the period. Domestic workers and workers from primary activities and commerce increased their labour earnings over the period. On the other hand, workers in public administration, skilled services, and utilities and transportation suffered an earnings loss. Finally, labour earnings of workers with high educational levels fell, while workers with medium and low levels of education had an increase in their labour earnings.

The evidence of falling labour earnings for workers with high educational levels and labour earnings increases for workers with medium and low educational levels can be interpreted in light of previous findings of improving employment structure by occupational group and economic sector over the period, and improving educational level of the employed population. The improving employment structure by occupational group and economic sector implied an increase in the share of occupations and sectors that can be expected to employ workers with high and medium educational levels, such as management and professional occupations, public administration, skilled services, and utilities and transportation sectors, and a reduction in the share of occupations and sectors that employ workers with low educational levels, such as elementary and agricultural occupations, and domestic workers and primary activities sectors. This evidence indicates that the demand for workers with high and medium educational levels relative to those with low educational levels increased between 2000 and 2012. On the other hand, the educational level of people in the labour force improved over the same period, indicating an increase in the relative supply of workers with high and medium levels of education (Cruces et al. 2015: table 8). The prediction of a supply and (p.172) demand analysis is that the relative wages of workers with high and medium educational levels relative to those with low educational levels will rise or fall depending on which effect dominates (increase in the relative demand versus increase in the relative supply). In the Bolivian labour market the relative wages of workers with high and medium educational levels relative to those with low educational levels fell over the period, and the relative wages of workers with high educational levels relative to those with medium educational levels also decreased (Cruces et al. 2015: table 7). The adjustment process also led to a reduction in the unemployment rate of all educational levels, with a larger reduction for workers with medium levels of education (Cruces et al. 2015: table 9).

Even during the international crisis of 2008, labour earnings continued to grow overall and for all demographic groups. However, some employment categories were impacted adversely by the 2008 crisis. Among occupational groups, workers in the armed forces, agricultural, forestry, and fishery workers, professionals, management workers, and workers in elementary occupations were affected negatively by the international crisis of 2008. Among economic sectors, workers from skilled services, public administration, primary activities, domestic workers, and workers from education and health were affected negatively by the international crisis of 2008. Among educational groups, workers with high educational levels were the only ones affected adversely by the international crisis of 2008.

8.6 Poverty and Inequality

Poverty indicators exhibited important reductions between 2000 and 2012 for all poverty lines used, with ups and downs over the period. The downward trend was not affected by the international crisis of 2008.(Cruces et al. 2015: figure 10)

The moderate poverty rate (measured by the country’s official poverty line) fell from 65.0 per cent in 2000 to 39.1 per cent in 2012 (drop of 945,498 in the number of moderately poor persons); the extreme poverty rate dropped from 42.2 per cent to 18.7 per cent (drop of 1,332,796 in the number of extremely poor persons); the percentage of working poor (defined as the proportion of persons in the population living in poor households where at least one member works) decreased from 56.2 per cent to 31.6 per cent over the same period (Table 8.1). The analysis of trends based on the 2.5 and 4 dollars-a-day PPP international poverty lines shows the same trends. All of these indicators moved with ups and downs in the first half of the period analysed and decreased steadily from 2007 onwards in the case of the official poverty (p.173) lines, and from 2005 onwards using the international poverty lines. The downward trends in the rates of poverty and working poor were not interrupted by the international crisis of 2008. In 2012 the moderate poverty rate and the percentage of working poor continued to decrease but at a slower pace, while the extreme poverty rate and the measures calculated using the international poverty lines showed a slight increase.

The erratic evolution of poverty indicators in the first half of the period studied has been attributed to high income inequality—high inequality slowed poverty reduction in good years and accelerated poverty in the bad years—and to the growth process based on hydrocarbons, a sector with a small share of total employment (Weisbrot and Sandoval 2007; Gray Molina and Yañez 2009). In the second half of the 2000s, labour incomes and incomes from government transfers during the international crisis explained the increase in household total income (Cruces et al. 2015: figure 11). The large availability of resources from hydrocarbon rents allowed the government to expand the social safety net through cash transfer programmes such as Bono Juancito Pinto, Bono Juana Azurduy, the non-contributory pension Renta Dignidad, as well as other social programmes, such as the undernourishment programme Desnutrición Cero, and the literacy programme Yo si puedo. However, Bolivian cash transfer programmes had only a small impact on poverty reduction (Vera Cossio 2011; Yañez et al. 2011). Some of the reasons for this include that: the programmes are not targeted to the poor (they are universal), generating significant leakages to the non-poor (Paz Arauco et al. 2013); the transfers are too small—only 4.0 per cent of the average annual consumption of a Bolivian household—(McGuire 2013); and they are poorly complemented by effective public provision of health and education, and implemented by a state with low administrative capacity (McGuire 2013).

Household per capita income and labour earning inequality decreased between 2000 and 2012 but moved erratically over the period. The reducing trend was not interrupted by the international crisis of 2008. (Cruces et al. 2015: figure 12)

Household per capita income and labour earning inequality decreased while GDP increased over the period. The Gini coefficient of household per capita income fell from 0.619 in 2000 to 0.465 in 2012. This indicator moved erratically from 2000 to 2005 and then decreased steadily until 2011, when it stabilized at around 0.463. Throughout the period, the Gini coefficient of labour earnings among employed workers was slightly lower than that of household per capita income. Its evolution mirrored the movement of the Gini coefficient of household per capita income and fell from 0.594 in 2000 to 0.467 in 2012 (Table 8.1). The evolution of the Gini coefficient of labour earnings over the period is not surprising given the previous evidence of rising incomes for low-earning categories and decreasing incomes for high-earning (p.174) categories. Consequently, the reduction in labour-earning inequality in Bolivia occurred at the expense of income losses for some categories.

Changes in household per capita income inequality in Bolivia in the first half of the 2000s have been explained mainly by factors associated with the labour market: (1) the level of education of the household head; (2) labour activity of the household (proportion of household members who are unemployed, proportion in each occupational position, and proportion in each occupational group); and to a lesser extent (3) demographic characteristics (Gray Molina and Yañez 2009). On the other hand, fiscal policy had a small effect on income inequality in the second half of the period studied. Between 2007 and 2009, social spending in Bolivia increased through a new wave of cash transfer programmes. However, none of the programmes was designed with a targeted mechanism to the poor since eligibility is not conditional on being poor. As a result, the inequality reduction in Bolivia is small once direct transfers and indirect taxes are accounted for (Lustig et al. 2011; Paz Arauco et al. 2013). Changes in labour earnings inequality between 2000 and 2010 have been explained through the reduction in the education wage premium in the labour market (or ‘price effect’) and changes in the distribution of the stock of education (or ‘quantity effect’) (Azevedo et al. 2013). The reductions in the education wage premium between 2000 and 2007 were consistent with a robust increase in the relative supply of workers with high educational levels (those with complete or incomplete college education) and a concurrent fall in its relative demand (Gasparini et al. 2011). Institutional factors have also played a role in changes in labour earnings inequality. Canavire-Bacarreza and Rios-Avila (2015) analysed the evolution of labour income inequality in Bolivia from 2000 to 2012 and reported a faster earnings growth in the lower quintiles of the earnings distribution compared to the highest quintiles. The authors associated this finding with increases in the minimum monthly earnings as well as anti-discriminatory policies. They also found that changes in demographic characteristics explain only a small portion of the observed inequality decline, while the fall in the returns to education and changes in the occupational structure of employment are the main contributors to the decline in earnings inequality over the period.

8.7 Conclusions

From 2000 to 2012, Bolivia experienced moderate economic growth by Latin American standards. The economy suffered a slowdown as a consequence of the international crisis of 2008, but Bolivia was one of the few countries in Latin America to have sustained positive growth during that episode.

(p.175) All labour market indicators improved between 2000 and 2012, and that trend was, in general, not affected by the international crisis of 2008. The unemployment rate was always low and fell over the period. The composition of the employed population by occupational group improved between 2000 and 2012 as workers moved from elementary and agricultural, forestry and fishery occupations to better-paying occupations, such as management and professional jobs. The employment structure by occupational position also improved through the reduction in the share of self-employed and unpaid workers in total employment and the increase in the share of wage/salaried employees and employers. Workers moved from low-earning economic sectors like domestic service and primary activities to high-earning sectors such as public administration, skilled services, and utilities and transportation. The educational level of the Bolivian employed population improved steadily over the period, the overall share of workers registered with the social security system increased, and labour earnings grew between 2000 and 2012. Moreover, the moderate and extreme poverty rates and the rate of working poor households showed important reductions between 2000 and 2012, as did the Gini coefficient of per capita household income and labour earnings.

The international crisis of 2008 led to an interruption in the downward trend of the unemployment rate, but the pre-crisis trajectory was recovered immediately. The remaining labour market indicators were not affected by the crisis.

Young workers and women had worse labour market outcomes over the period compared to adults and men respectively, and while the effects of the international crisis were negligible in general, young workers suffered some adverse impacts. The unemployment rate was higher for young compared to adult workers, the shares of young employed workers in low-earning occupations and sectors were larger than the shares of adult workers, the percentage of young workers registered with the social security system was lower when compared to adults, and labour earnings of young workers were below those of adults. On the other hand, the share of young workers in low-earning occupational positions was below that share for adults. In addition to the generally inferior situation of young workers in the labour market, youth suffered an increase in the share of workers in low-earning positions and a decrease in the percentage of workers registered with the social security system during the international crisis. Disaggregating by gender, we found that men outperformed women in all labour market indicators over the period, and none of them suffered any adverse effect of the crisis.

In summary, notwithstanding the international crisis of 2008, Bolivian labour market conditions were in a better state in 2012 than they were at the start of the millennium.

(p.176) References

Bibliography references:

Azevedo, J. P., M. E. Dávalos, C. Díaz-Bonilla, B. Atuesta, and R. A. Castañeda (2013). ‘Fifteen Years of Inequality in Latin America: How Have Labor Markets Helped?’. Policy Research Working Paper 6384. Washington, DC: World Bank.

Cali, M. and L. C. Jemio (2010). ‘Bolivia’. Case Study for the MDG Gap Task Force Report. London: Overseas Development Institute.

Canavire-Bacarreza, G. and F. Rios-Avila (2015). ‘On the Determinants of Changes in Wage Inequality in Bolivia’. Working Paper 835. Annandale-on-Hudson: Levy Economics Institute of Bard College.

CEDLAS and World Bank (2014). SEDLAC—Socio-Economic Database for Latin America and the Caribbean. Centro de Estudios Distributivos, Laborales y Sociales, Facultad de Ciencias Económicas, Universidad Nacional de La Plata and World Bank Poverty Group LCR. Available at <http://sedlac.econo.unlp.edu.ar/eng/index.php>, accessed 2014.

Cruces, G., G. Fields, D. Jaume, and M. Viollaz (2015). ‘The Growth–Employment–Poverty Nexus in Latin America in the 2000s: Bolivia Country Study’. WIDER Working Paper 2015/070. Helsinki: UNU-WIDER.

Gasparini, L., S. Galiani, G. Cruces, and P. Acosta (2011). ‘Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply–Demand Framework, 1990–2010’. IZA Working Paper 6244. Bonn: Institute for the Study of Labor.

Gray Molina, G. and E. Yañez (2009). ‘The Dynamics of Inequality in the Best and the Worst of Times. Bolivia 1997–2007’. Research for Public Policy Inclusive Development 16-2009. New York: RBLAC-UNDP.

IMF (2006). ‘Bolivia: 2006 Article IV Consultation’. IMF Country Report 06/270. Washington, DC: International Monetary Fund.

IMF (2010). ‘Bolivia: 2009 Article IV Consultation’. IMF Country Report 10/27. Washington, DC: International Monetary Fund.

IMF (2014). ‘Bolivia: Staff Report for the 2013 Article IV Consultation’. IMF Country Report 14/36. Washington, DC: International Monetary Fund.

Jemio, L.C. and O. Nina (2010). ‘Bolivia Phase 2’. Global Financial Crisis Discussion Series. London: Overseas Development Institute.

Lustig, N., C. Pessino, G. Gray Molina, W. Jimenez, V. Paz Arauco, E. Yañez, C. Pereira, and S. Higgins (2011). ‘Fiscal Policy and Income Redistribution in Latin America: Challenging the Conventional Wisdom’. Working Paper 311. New Orleans: Tulane University Economics.

McGuire, J. (2013). ‘Conditional Cash Transfers in Bolivia: Origin, Impacts and Universality’. Paper prepared for the 2013 Annual Meeting of the International Studies Association, San Francisco, 3–6 April 2013. Middletown: Wesleyan University.

Monterrey Arce, J. (2013). ‘Social Protection Systems in Latin America and the Caribbean: Plurinational State of Bolivia’. ECLAC, Project Documents Collection. Santiago de Chile: United Nations.

Muriel, B. and L. C. Jemio (2010). ‘Mercado laboral y reformas en Bolivia’. Serie de Documentos de Trabajo sobre Desarrollo 07/2010. La Paz: Instituto de Estudios Avanzados en Desarrollo.

(p.177) Paz Arauco, V., G. Gray Molina, W. Jimenez Pozo, and E. Yañez Alguila (2013). ‘Explaining Low Redistributive Impact in Bolivia’. CEQ Working Paper 6. New Orleans: Tulane University.

Vera Cossio, D. (2011). ‘Matriculacion y trabajo infantil en Bolivia: Un analisis quasi experimental’. Working Paper 11/2011. La Paz: Instituto de Estudios Avanzados en Desarrollo.

Wanderley, F. (2009). ‘Crecimiento, empleo y bienestar social. ¿Por qué Bolivia es tan desigual?’. Coleccion 25 Aniversario, Postgrado en Ciencias del Desarrollo, Universidad Mayor de San Andrés. La Paz: Plural Editores.

Weisbrot, M. and L. Sandoval (2007). ‘La economía Boliviana y su evolucion reciente’. Informe Agosto 2007. Washington, DC: Center for Economic and Policy Research.

World Bank (2014). World Development Indicators. Available at <http://data.worldbank.org/data-catalog/world-development-indicators>, accessed April 2014.

Yañez, E., R. Rojas, and D. Silva (2011). ‘The Juancito Pinto Conditional Cash Transfer Program in Bolivia: Analyzing the Impact on Primary Education’. Policy Brief, May 2011. Ottowa: Canadian Foundation for the Americas.

Notes:

(1) See Cruces et al. (2015: table 8.1) for details on the size of Bolivia household surveys.

(2) Bolivia was part of the joint IMF/World Bank Heavily Indebted Poor Countries programme that provided 100 per cent debt relief in 2006.

(3) The most frequent value of years of education for employed workers in Bolivia was five between 2000 and 2002 (around 12.4 per cent of employed workers had five years of education) and twelve between 2003 and 2012 (around 16.5 per cent of employed workers had twelve years of education).

(4) The improvement in the employment structure by educational level is related to changes in the relative demand and supply of workers with high educational levels with corresponding implications on the wage gap by educational groups and the unemployment rate of each educational level. We introduce a discussion about the role of these factors in section 8.5.

(5) The average registration rate of self-employed workers during the period 2000–12 was only 2.51 per cent, while it was 32.8 per cent for wage/salaried employees.