Sponsoring Agency: Japan International Cooperation Agency

Period of Study: May 23, 2012-15 January, 2013

Status of the Study: Completed

Abstract: Recent world developments have put jobs at the center of the policy debate. The World Bank’s World Development Report 2013 aims to improve our understanding of the connection between jobs and important dimensions of economic and social development. The WDR emphasizes the differences in the nature of jobs which can affect their potentials to influence three transformations in the process of development: i) raise living standards, ii) increase aggregate productivity, and iii) enhance social cohesion. The present study has been undertaken as a background paper for the WDR 2013 on Jobs. In the case of Bangladesh, the study argues, the role of jobs has been fundamental for understanding the above-mentioned three developmental transformations. However, that story of interface between growth and employment drivers has not been narrated as yet in analytical terms. 

In this study we argue that employment and wages played a fundamental role in poverty and inequality changes in the Bangladesh society. The changes in employment and labor market that have been observed in case of Bangladesh link back to five crucial “doorstep conditions” underlying the structural transformations that have (arguably) taken place in Bangladesh over the past three decades: (a) progressive promise of high-population density conditions leading to technology adoption in agriculture; (b) the ability to learn-by-doing (or seeing) in the context of changing global market opportunities leading to accelerated manufactured exports growth and international migration; (c) a supportive socially transformative role of family planning, spread of basic education, women’s empowerment, and in recent years, through increased allocations to social protection; (d) innovative institutional arrangements for addressing the “credit constraint”, and (e) ability to sustain a rapid pace of urbanization as a source of agglomeration economies and of beneficial influence on the productivity of rural non-farm sectors through spatial linkage effects. It is the combination of these conditions that may have led to shifts of surplus labor out of agriculture, causing virtuous cycle of growth and poverty reduction--out of “below-poverty level equilibrium trap”. The study puts forward the hypothesis that the link between jobs and development are underpinned by the “ascent of the poor” and the process is driven by the upward mobility of relatively unskilled labor out of agriculture through rural non-farm sector growth, access to labor intensive manufacturing, international migration and urbanization.