Mauritius Addressing Inequality through More Equitable Labor Markets
Mauritius is often cited as one of the few African success stories, and with good reason. In the aftermath of independence (1968), this small island nation in the Indian Ocean seemed to be bound for economic failure because of its high poverty rate...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/408771513151993900/Mauritius-Addressing-inequality-through-more-equitable-labor-markets http://hdl.handle.net/10986/29034 |
| Summary: | Mauritius is often cited as one of the
few African success stories, and with good reason. In the
aftermath of independence (1968), this small island nation
in the Indian Ocean seemed to be bound for economic failure
because of its high poverty rate and numerous
vulnerabilities, including high population growth, ethnic
tensions, substantial unemployment, and an economy greatly
dependent on the production of sugar for international
markets. However, Mauritius was successful in diversifying
the economy and accomplishing an unprecedented structural
transformation.The Inclusiveness of Growth and Shared
Prosperity report (World Bank 2015a) turned the spotlight on
the expanding gap of inequality in household incomes that
occurred between 2007 and 2012 and on the negative impact on
poverty. The report estimates that the incidence of absolute
poverty between 2007 and 2012 would have declined twice as
quickly had growth been shared more widely and inequality
not worsened. Building on these earlier findings, this study
investigates the driving forces behind the growing income
inequality and identifies policy levers that could mitigate
and, in the long run, possibly reverse the upward trend.This
study takes a comprehensive approach to the determinants of
inequality by including the role of the choices of
households and individuals, markets, and institutions. The
report is structured as follows. Chapter one sets the stage
by presenting stylized facts on the trends in household
income inequality between 2001 and 2015, comparing these
trends with trends in consumption inequality, and
identifying the main culprit behind the rapidly rising
inequality in household incomes, that is, household labor
income. Chapter two supplies a set of descriptive trends of
the two groups of factors, namely, household demographics
and labor market forces, that contribute to changes in
household laborincome and follows up with a decomposition
exercise on changes in household labor income between 2001
and 2015.Because the analysis indicates that an unequal
increase in female labor force participation and rising
inequality in individual earnings are among the main
contributors to the expanding inequality in household labor
income, Chapter three takes a deep dive into the issue of
gender inequality in the labor market. The chapter
illustrates the gender gap in labor market participation,
describes the differences in the activities of working women
in the labor market relative to men, and concludes with a
detailed analysis of gender gaps in wages separately in the
public and private sectors. Chapter four resumes the main
analysis of the drivers of increasing inequality in
individual earnings. The chapter first presents stylized
facts about overall inequality in wages and then separates
out changes in inequality between and within groups defined
by demographic characteristics. The chapter distinguishes
the role of changes in prices (or wages) and the role of
changes in the composition of the workforce in rising
earnings inequality. The second part of the chapter is
devoted to the analysis of the role of the main potential
drivers of expanding earnings inequality. The possible
candidates include the interaction of changes in labor
supply and labor demand, giving rise to skills shortages or
surpluses, and changes in labor market institutions, namely,
remuneration orders (ROs). The chapter concludes with an
analysis of an additional source of skills mismatches among
the employed population, namely, education mismatches, and
advances potential explanations for the coexistence of a
substantial skills shortage, over education, particularly
among youth, and a large share of highly educated youth
among the unemployed. |
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