The Evolution of Poverty and Inequality in Jamaica in 2003-07: Trends and Determinants

After little change in poverty between 1997 and 2002, Jamaica’s poverty headcount halved between 2003 and 2007 despite slow GDP growth. This paper analyzes the factors contributing to the observed reduction in poverty using household and labor force surveys. It sets out by providing a sectoral, demographic, and spatial picture of the evolution of poverty and finds that poverty reduction has been broad based, benefitting both rural and urban areas. Nearly three quarters of the poverty reduction is attributed to growth in average household consumption, which outpaced GDP growth, and one quarter to narrowing inequality. Around half of the reduction of inequality is attributed to falling returns to education and a narrowing of sectoral wage differences.