The Impact of Financial Crises on Labor Markets, Household Incomes, and Poverty : A Review of Evidence

The 1990s have witnessed several financial crises, of which the East Asia and Mexico tequila crises are perhaps the most well-known. What impact have these crises had on labor markets, household incomes, and poverty? Total employment fell by much l...

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Bibliographic Details
Main Authors:	Fallon, Peter R., Lucas, Robert E. B.
Format:	Journal Article
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	AGGREGATE DEMAND AGRICULTURAL EMPLOYMENT AGRICULTURAL PRODUCTS AGRICULTURAL WAGES AVERAGE WAGE BANKING CRISIS BANKING SECTOR BANKRUPTCIES BENEFICIARIES BORROWING BUDGET DEFICITS BUDGET SURPLUSES CAPITAL FLOWS CAPITAL OUTFLOWS COLLECTIVE BARGAINING CONSUMER GOODS CONSUMPTION SMOOTHING COST OF LIVING CREDIT MARKETS CRISES CRISIS COUNTRIES CRISIS COUNTRY CURRENCY CURRENCY BOARD CURRENCY DEPRECIATION CURRENCY DEPRECIATIONS CURRENCY DEVALUATION DEBT DEBT CRISIS DEFAULTS DEFICITS DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISPLACED WORKERS DISTRIBUTIONAL EFFECTS DROUGHT ECONOMETRICS ECONOMIC CRISES ECONOMICS EMPLOYMENT GROWTH EMPLOYMENT IN AGRICULTURE EMPLOYMENT PROGRAM EMPLOYMENT RATE EMPLOYMENT SHARE EMPLOYMENT SITUATION EMPLOYMENT STATUS EXCHANGE RATE EXPENDITURE EXPENDITURES EXPLICIT CONTRACTS EXPORTER FAMILY LABOR FARMERS FINANCIAL CRISES FINANCIAL CRISIS FIXED COSTS FOOD CROP FOOD CROPS FOOD PRICES FOREIGN CURRENCY FOREIGN WORKERS GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HIGH SCHOOL DROPOUT HIGH UNEMPLOYMENT HIGH UNEMPLOYMENT RATES HOUSEHOLD COMPOSITION HOUSEHOLD CONSUMPTION HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD SURVEY HUMAN RESOURCES IDIOSYNCRATIC SHOCKS IMPLICIT CONTRACTS INCIDENCE OF POVERTY INCOME DISTRIBUTION INCOME INEQUALITIES INCOME INEQUALITY INCOME SHOCK INFLATION INFORMAL CREDIT INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL ECONOMICS INTERNATIONAL MIGRATION JOB RETENTION JOB SEPARATION JOBS LABOR DEMAND LABOR FORCE LABOR FORCE PARTICIPATION LABOR MARKET LABOR MARKET ADJUSTMENT LABOR MARKET CONDITIONS LABOR MARKETS LABOR PRODUCTIVITY LABOR SUPPLY LABORERS LABOUR LABOUR MARKET LABOUR OFFICE LABOUR STATISTICS LACK OF CREDIT LAID-OFF WORKERS LANDLESS LABORERS LAYOFFS LEVY LOCAL CURRENCIES LOSS OF CONFIDENCE MACROECONOMIC CRISES MALNUTRITION MANUFACTURING WAGES MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MIGRANT LABOR MINIMUM WAGE MONETARY POLICIES MONETARY POLICY MONEY SUPPLY MORTALITY NEW POOR NOMINAL INTEREST RATES NOMINAL WAGES NUTRITION OPEN UNEMPLOYMENT OPPORTUNITY COST PAID WORKERS PER CAPITA CONSUMPTION POOR POOR FAMILIES POVERTY INCIDENCE POVERTY LINE POVERTY REDUCTION PRIMARY SCHOOL PRIVATE TRANSFERS PUBLIC INVESTMENT PUBLIC SAFETY NETS PUBLIC SECTOR EMPLOYMENT PUBLIC SPENDING PUBLIC WORKS PUBLIC WORKS PROGRAMS REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATES REAL WAGE REAL WAGES REMITTANCES RETENTION RATE RETURN RETURNS RURAL RURAL AREAS RURAL BANKS RURAL FAMILIES RURAL HOUSEHOLD RURAL HOUSEHOLDS RURAL POOR RURAL POVERTY RURAL SECTOR RURAL WAGES RURAL WOMEN SAFETY SAFETY NET SAFETY NETS SERVANTS SERVICE SECTORS SHORT-TERM CAPITAL SKILLED WORKERS SOCIAL DEVELOPMENT SOCIAL IMPACTS SOCIAL SAFETY NETS SOCIAL SECURITY SOCIAL SPENDING STRUCTURAL ADJUSTMENT TARGETING TOTAL EMPLOYMENT TRADE CREDIT TRANSFER BENEFITS TRANSFER PROGRAMS TRANSPORT TURNOVER UNEMPLOYED UNEMPLOYMENT UNEMPLOYMENT RATE UNPAID FAMILY WORKERS UNSKILLED WORKERS URBAN EMPLOYMENT URBAN EMPLOYMENT SURVEY URBAN WORKERS WAGE DISTRIBUTION WAGE EMPLOYMENT WAGE GROWTH WAGE LEVELS WAGE RATE WAGE RIGIDITY WAGE SECTOR WITHDRAWAL WORKER WORKERS WORKING CAPITAL WORKING HOURS
Online Access:	http://documents.worldbank.org/curated/en/2002/01/17591989/impact-financial-crises-labor-markets-household-incomes-poverty-review-evidence http://hdl.handle.net/10986/16460

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Summary:	The 1990s have witnessed several financial crises, of which the East Asia and Mexico tequila crises are perhaps the most well-known. What impact have these crises had on labor markets, household incomes, and poverty? Total employment fell by much less than production declines and even increased in some cases. However, these aggregates mask considerable churning in employment across sectors, employment status, and location. Economies that experienced the sharpest currency depreciations suffered the deepest cuts in real wages, though deeper cuts in real wages relative to Gross Domestic Product (GDP) were associated with smaller rises in unemployment. To some extent, families smoothed their incomes through increased labor force participation and private transfers, though the limited evidence available suggests that wealthier families were better able to smooth consumption. The initial impact of the crises was on the urban corporate sector, but rural households were affected as well and in some instances suffered deeper losses than did urban families. School enrollment declined, especially among poorer families, as did use of health facilities, but the impact on children's nutrition levels appears to vary. Crises have typically proved short-lived, but whether households plunged into poverty during a crisis is able to recover as the economy does remain an open question.

The Impact of Financial Crises on Labor Markets, Household Incomes, and Poverty : A Review of Evidence

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