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International
Labour
Organization
ILOWorkingPaper107
February/2024
?Employmentandwagedisparitiesbetweenruralandurbanareas
Authors/SévaneAnanian,GiuliaDellaferrera
二—=Q
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01?ILOWorkingPaper107
Abstract
Statisticalevidencefrom58countriesshowsthatalthoughpeopleinruralareasaremorelikelytobeinemploymentthanthoseinurbanones,theyalsotendtohavejobsthatcanputthematriskofexperiencinginadequatelabourprotectionaswellaslowpay.Inparticular,ruralwork-ersarepaid,onaverage,24percentlessthantheirurbancounterpartsonanhourlybasis,andonlyhalfofthisgapcanbeexplainedbyrural-urbandiscrepanciesineducation,jobexperienceandoccupationalcategory.Developingcountriesexhibitarelativelywidergap,withtheunex-plainedpartalsobeinglarger.Furthermore,inmanycountries,certaingroupsofruralworkersareatgreaterdisadvantage,suchaswomen,who,onaverage,appeartoearnlessthanmeninruralareas.However,institutionalandregulatoryframeworks,notablythosethatsetminimumwagesorseektopromoteequalopportunities,canhelptoreducelabourmarket-relatedine-qualitiesacrosstherural-urbandivide.
Abouttheauthors
SévaneAnanian
SévaneAnanianjoinedtheResearchDepartmentoftheInternationalLabourOrganization(ILO)inSeptember2021.Hisfieldsofstudiesincludeinequalitiesandwagesettinginstitutions.HepreviouslyworkedasawagespecialistbasedattheILOCairooffice,whereheprovidedsup-portonwagepoliciestoAfricancountries.Formerly,heservedasaneconomistatthestatisticalserviceoftheFrenchministryoflabour(DARES)andasarapporteurfortheFrenchminimumwageexpertgroup.
GiuliaDellaferrera
GiuliaDellaferrerajoinedtheResearchDepartmentoftheILOinAugust2023,whereshefocus-esonwork-relateddiscrimination,inequalities,violenceandharassment,aswellasoccupation-alsafetyandhealth.Previously,sheworkedonforceddisplacementatUNHCRProtectionUnitforBelgiumandLuxembourg,andasalegalassociateatICRCRegionalDelegationinParisandGenocideWatch.Sheisspecialisedinhumanrightsandinternationalhumanitarianlaw.
02?ILOWorkingPaper107
Tableofcontents
Abstract
01
Abouttheauthors
01
Acronyms
07
Introduction08
1Dataanddefinitions
Asampleofhouseholdsurveysfrom58countries
Nationaldefinitionsofurbanandruralareas
10
10
11
2Employmentinruralandurbanareas
12
Amethodologyforanalysingthedifferencesinlabourmarketoutcomesbetweenruraland
urbanareaswhileaccountingforthecharacteristicsofpopulations
12
Evenaftercontrollingforageandeducation,livinginaruralareaincreasesthelikelihoodof
employmentacrossallcountryincomegroups
13
Workersinruralareasaremorelikelytobeself-employed
14
?3Wagesinruralandurbanareas
Higherproportionoflowpaidworkersinruralareas
Ruralemployeestendtohavelowereducationalattainmentandlessexperiencethanurbanemployees,especiallyindevelopingcountries
Aspecificoccupationalprofileofruralemployees
Ruralemployeesearnonaverage24percentlessthanurbanemployees,withhalfofthatgapexplainablebydifferencesintermsofeducation,experienceandoccupation
Onaverage,ruralfemaleemployeesearnlessthantheirmalecounterparts
Rural-urbanpaygapandminimumwages
19
19
20
21
23
27
28
4Legalframeworksfortacklingrural-urbanimbalancesinemployment
andwages
32
Theroleofinternationallabourstandards
32
Internationallabourstandardsonequalityandtheeliminationofdiscriminationinrespect
ofemploymentandoccupation
33
Internationallabourstandardsonminimumwagesandwage-setting
34
Otherinternationallabourstandardsdealingwithwages
36
Nationalpracticesrelatedtoinequalitiesinruralareas
37
India'sNationalRuralEmploymentGuaranteeSchemes:Theimpactofruralpublicworkson
agriculturalwages
37
03ILOWorkingPaper107
Austrianlegislationongenderequalityinruralareas38
Conclusions
40
Appendix
41
References
47
Acknowledgements
52
04?ILOWorkingPaper107
ListofFigures
Figure1.Shareofwomenamongemployees,bycountryincomegroup,2019orlatestavaila-bleyear(percentage)
Figure2.Shareofwomenamongself-employedworkers,bycountryincomegroup,2019orlatestavailableyear(percentage)
FigureB.2.1Distributionofselfemployedworkersinruralandurbanareasaccordingtotheirnumberofhoursworked,bycountryincomegroup,2019orlatestavailableyear(percentage)
FigureB.2.2Distributionofemployeesinruralandurbanareasaccordingtotheirnumberofhoursworked,bycountryincomegroup,2019orlatestavailableyear(percentage)
FigureB.2.3.Shareoftemporarycontratctsinruralandurbanareas,bycountryincomegroup,2019orlatestavailableyear(percentage)
Figure3.Shareofruralemployeesineachquintileofthewagedistribution,bycountryin-comegroup,2019orlatestavailableyear(percentage)
Figure4.Shareoflow-paidworkersamongruralandurbanemployees,bycountryincomegroup,2019orlatestavailableyear(percentage)
Figure5.Distributionofruralandurbanemployeesaccordingtotheireducationallevel,bycountryincomegroup,2019orlatestavailableyear(percentage)
Figure6.Distributionofruralandurbanemployeesaccordingtotheiragegroup,bycountryincomegroup,2019orlatestavailableyear(percentage)
Figure7.Distributionofoccupationsamongruralandurbanemployees,bycountryincomegroup,2019orlatestavailableyear(percentage)
Figure8.Averagepaygapbetweenruralandurbanemployees,bycountry,decomposed,2019orlatestavailableyear(percentage)
Figure9.Genderpaygapinruralandurbanareas,bycountryincomegroup,2019orlatestavailableyear(percentage)
Figure10.Averagewagegapbetweenruralandurbanworkers,incountrieswithaspecific
minimumwagefortheagriculturalsector,2019orlatestavailableyear(percentage)
FigureB.5.1.Shareofruralself-employedworkersineachquintileofthedistributionofin-comefromemployment,2019(percentage)
FigureB.5.2.Averaageemploymentincomegapsbetweenruralandurbanself-employedworkers,decomposed,2019(percentage)
FigureB.5.3.Genderemploymentincomegapamongruralandurbanself-employedwork-ers,2019,(percentage)
FigureA1.Shareofworking-agepopulationlivinginruralareasinthesampledcountries,2019orlatestavailableyear(percentage).
FigureA2.Shareoflow-paidemployeesinruralareasinthesampledcountries,2019orlat-estavailableyear(percentage)
FigureA3.Distributionofmaleandfemaleruralemployeesaccordingtotheirlevelofedu-cationincountrieswithanegativeruralgenderpaygap,2019orlatestavailableyear(percentage)
15
15
17
17
18
20
20
21
21
22
25
27
29
30
30
31
41
42
43
05?ILOWorkingPaper107
ListofTables
Table1.Effectoflivinginaruralareaontheprobabilityoflabourforceparticipation,unem-
ploymentandwageemployment(percentagepoints)14
TableA1.Nationaldatasourcesusedtoanalyseruralandurbanemploymentandwages43
06?ILOWorkingPaper107
ListofBoxes
Box1.Estimatingtheeffectoflivinginaruralareaontheprobabilityofselectedlabour
marketoutcomes
12
Box2.Workingtimeinruralandurbanareas
15
Box3.Analysingtherural-urbanwagegap
23
Box4.Examplesofrecenttrendsinruralrealwages
26
Box5.Employmentincomesfromself-employmentinruralandurbanareasinAngolaand
Brazil
29
Box6.Internationallabourstandardsrelevanttoemploymentandwagesinruralareas32
07?ILOWorkingPaper107
Acronyms
CBOCongressionalBudgetOffice(oftheUnitedStatesofAmerica)
CEACRCommitteeofExpertsontheApplicationofConventionsandRecommendations
(oftheILO)
CPIConsumerPriceIndex
IBGEBrazilianInstituteofGeographyandStatistics
ICLSInternationalConferenceofLabourStatisticians
ICSEInternationalClassificationofStatusinEmployment
INSEENationalInstituteofStatisticsandEconomicStudies(ofFrance)
ISCOInternationalStandardClassificationofOccupations
NREGSNationalRuralEmploymentGuaranteeSchemes(inIndia)
OECDOrganisationforEconomicCo-operationandDevelopment
08?ILOWorkingPaper107
?Introduction
Livelihooddisparitiesbetweenruralandurbanareashavebeenobservedworldwide.Globally,thepovertyrateinruralareasisestimatedat17.2percent,whichismorethanthreetimestherateinurbanareas(5.3percent)(UN2019).Thismeansthataround79percentoftheworldspoorliveinruralareas.
Thesedisparitiesbetweenruralandurbanareasstemtosomeextentfromdifferencesinlabourmarketoutcomes.Morespecifically,combinationsofvariousoutcomesintermsofemploymentandlabourincomescouldexplaininparttherelativedisadvantagefacedbypeoplelivingout-sidecities.Existingevidenceshows,forinstance,thatwhileurbanandruralempioymentratesareusuallyquitesimilarinhigh-incomecountries,peopleinruralareasinpoorercountrieshaveastrongertendencytoparticipateinemployment,asthelackofsocialprotectionorfinan-cialsupportmaypromptthemtotakeupanyavailablejobregardlessofitsquality(ILO2020a).Significantly,oneintenagriculturalworkerswereininformalemploymentin2016-aratethatmaybeindicativeofjobqualitydeficitsintherurallabourmarket.
However,notmanyglobalstudieshavesoughttomeasurerural-urbandiscrepanciesinlabourmarketoutcomeswhiletakingintoaccountthespecificsocio-demographiccharacteristicsofpeo-plelivinginthesetwotypesofarea.Rawassessmentsofrural-urbangapsinlabourforcepar-ticipationandunemploymentcouldgiveapartialpictureoftherural-urbandivideinthelabourmarket,asthesegapsarelikelytoreflecttoacertainextentthedifferentcompositionsofruralandurbanpopulations-includingintermsofageandeducation.Forinstance,employmenthasbeenfoundtodependoneducationandexperienceinmanycases,asinmembercountriesoftheOrganisationforEconomicCo-operationandDevelopment(OECD),wherepeoplewithhigh-ereducationalattainmentare,onaverage,morelikelytohaveajob(OECD2014).Inthatregard,disentanglingtheeffectsofpeople'ssocio-demographiccharacteristicsfromotherdimensionsthatmaymanifestthemselvesalongtherural-urbandivideiscriticalwhenanalysingthelabourmarketoutcomesofruralpopulations.
Furthermore,onlyafewinternationalstudieshaveinvestigatedrural-urbangapsinworkingconditions,indludingearnings.Thereareseveralfactorsthatmaygiverisetosubstantialrural-urbandifferencesinlabourincomeacrosscountries,suchasarelativelylowerruralproductivi-ty.Empiricalevidencefromdevelopingcountriesindeedpointstoproductivityintheagriculturalsector,whichaccountsforalargeshareofemploymentinruralareas,beingsubstantiallylowerthaninothersectors(Gollin,LagakosandWaugh2014).InOECDcountries,productivitylevelsinruralareaswere,onaverage,20percentlowerthanthoseinurbanareasin2015,withanaver-agegapof46percentbetweenthemostandleastproductiveregionsinacountry(OECD2019).!
Asforthefactorsthatshaperural-urbandiscrepanciesinproductivity,theavailableempiricalevidenceshowsthatthespatial"sorting"offirmsandworkersislikelytoplayacriticalrole.Forexample,skilledworkersmaywanttomovetoareasthathavefeatureswhichtheyregardasvaluableorthatofferhigherreturnstoeducation,whilelargefirmsmaybepromptedbyvari-ousincentivestorelocatetheirfacilitiestoareaswithbigmarkets,wheretheirproductivitycanbeboostedthroughimprovedworker-firmmatching(MionandNaticchioni2009;Verstraten,VerweijandZwaneveld2018).
Nevertheless,causesnotdirectlylinkedtoproductivityandworkers'skillsmayalsoexplainpartoftheobservedrural-urbangapinearnings.Forinstance,spatialinequalitiesinrelationtothetreatmentofpeopleinthelabourmarketmayhaveanimpactonemploymentandwage
Amongthereasonsforrural-urbanproductivitygapsaretheeconomicopportunitiesthatcitiesofferrelativetoruralareas.Inthatregard,urbanagglomerationshavebeenfoundtoinherentlycontributetoincreasedproductivity,forinstancebecausetheycanfa-cilitatethe"sharing"ofindivisiblegoodsandfacilitiesorthematchingbetweenworkersandfirms(DurantonandPuga2004).
09?ILOWorkingPaper107
outcomes.InasampleofLatinAmericancountries,theethnicwagegapwasthusfoundtobehigherinruralareasthaninurbanones,evenaftercontrollingforworkersindividualcharacter-sticssuchaseducationandage(Atal,NopoandWinder2009).Focusingonspecificpopulationgroups,somestudieshavehighlightedincomegapsbetweenindigenousandnon-indigenouspopulations,whichtendtobelargerinruralorremoteareas(WilsonandMacdonald2010;AIHW2023).Empiricalstudieshavealsopointedtotherural-urbandivideasasourceofdiscriminationimpactingontheemploymentandwageprospectsofpeoplefromruralareasinsomecountries,suchasChinabecauseofthehukousystem(Chengetal.2013).?
Thepresentstudyseekstoprovideaglobaloverviewofrural-urbandisparitiesinlabourmar-ketoutcomeswhiletakingintoconsiderationthespecificitiesofruralpopulationsintermsofsocio-demographiccomposition,particularlythoserelatingtohumancapitalsuchaseducationandexperience.Aprecisedelineationofthefactorsthatmayshaperural-urbandisparitiesinthelabourmarketiscrucialforthedesignofpoliciesaimedathelpingpeopleinruralareas.
ThisstudyisintendedtocontributetotheILO'seffortstosupportruraldevelopment-atopicthathasbeenontheOrganization'sagendaeversinceitsestablishmentin1919,andwhoseimpor-tancewasreaffirmedbytheInternationalLabourConference'sadoption,in2008,oftheresolu-tionandcondlusionsonpromotingruralemploymentforpovertyreduction.Sincetherenewalofitscommitment,theILOhasbeenassistinggovernmentsandemployers'andworkers'organiza-tionsintheirtransformationofruraleconomies.Inaddition,theSustainableDevelopmentGoalsadoptedin2015bytheUnitedNationsGeneralAssemblycallfortheeradicationofextremepov-ertyforallpeopleeverywhere,includingpovertyassociatedwiththerural-urbandivide(Goal1).3
Afterabriefdescriptionofthedataandthedefinitionofurbanandruralareasusedforthepreparationofthisworkingpaper(section1),theanalysisfocusesonthelabourmarketout-comesthatdescribemaleandfemaleemploymentinbothgeographicalareas,namely,labourforceparticipation,unemploymentandstatusinemployment(section2).Drawingonabroadsampleofcountriesatvariouslevelsofdevelopment,thisoverviewseekstotakeintoaccountthespecificsocio-demographiccharacteristicsofruralpopulations,includingeducationandage.Forthesamecountries,anassessmentofthegapsinearningsbetweenruralandurbanareasisundertakeninsection3withaviewtoidentifyingtheshareoftheearningsgapthatcannotbeascribedtoruralspecificitiesintermsofhumancapitalandtheoccupationsheldbyworkers.Section4providesareviewofthelegalframeworksthatcanbeusedtotacklerural-urbanine-qualitiesinemploymentandwages.Anumberofconclusionsareofferedaftersection4.
Underthehukoufhouseholdregistration")system,individualsmustregisterwithlocalauthorities,whichentailscertainlimitationsondomesticmigration.
Asspecifiedbyindicator1.1.1oftheglobalindicatorframeworkfortheSustainableDevelopmentGoalsandtargetsofthe2030AgendaforSustainableDevelopment,progresstowardstheachievementofGoal1ispartlymeasuredthroughtheproportionofthepopulationlivingbelowtheinternationalpovertylinebygeographicallocation(urban/rural).
10?ILOWorkingPaper107
?1Dataanddefinitions
Asampleofhouseholdsurveysfrom58countries
TheanalysisreliesondatafromlabourforcesurveysandotherhouseholdsurveysintheILOHarmonizedMicrodatacollection,'whichcoversover160countries.Sincethefocusofthisstudyisonthelabourmarketoutcomesofpeoplelivinginruralareas,theanalysisdrawsonsurveysthatincludeinformationonboththeemploymentstatusandearningsofhouseholdmembers,inadditiontothegeographicallocationofthehousehold(urbanvs.ruralareas).Whenitcomestojobcharacteristicsandearnings,thereportedestimatesrefertothemainjobsofindividuals.
Toeliminatevariationinearningsduetodifferencesinworkingtime,theanalysisfocusesongrosshourlywages.Adescriptiveoverviewofworkingtimeinruralandurbanareasisnever-thelessprovidedseparately(seebox2furtherdown).
Eveniftheycollectedinformationonthesedimensions,surveysfromcountrieswithaverysmallsurfacearea-islandssuchasComoros,MaldivesandSamoa-werenotincludedinthesamplestudied.Insuchcountries,theboundariesbetweenurbanandruralareasmaybethin,leadingtoablurringofrural-urbandifferencesandmakingcomparisonslessmeaningful.Nigeriawasnotincludedinthesampleeitherbecausetheavailablesurveydidnotprovidekeyinformationrequiredfortheanalysis,suchastheoccupationsofworkers.
Thefinalworkingdatabasecomprises58countries,coveringallregionsanddifferentlevelsofdevelopment.Intermsofregions,thesampleincludes18countriesfromAfrica,3fromtheArabStates,14fromAsiaandthePacific,7fromEuropeandCentralAsia,and16fromtheAmericas.Intermsofcountryincomegroups,thereare8high-incomecountries,13upper-middle-incomecountries,28lower-middle-incomecountriesand9low-incomecountries.5Theselectedcoun-tries,andtheircorrespondingsurveys,arelistedintheappendix(tableA1).
Whenaveragesareestimatedforthewholesample,orbycountryincomegroup,eachcountrysweightedequally.Thismakesitpossibletohighlighttheroleofcountry-specificinstitutionsandpolicies.Weightingeachcountrybyitsnumberofworkingindividualswouldhavecausedtheresultstobedrivenmainlybythemorepopulouscountries.
Toavoidreflectingshort-termdisruptionlinkedtotheCOVID-19pandemic,thesurveysselectedwerefrom2019orthelatestavailableyearbefore2019.Duringthepandemic,manynationalstatisticalofficesadaptedtheirdatacollectionprocessestothesocialdistancingmeasuresim-plementedintheircountries.Thisislikelytoimpactoncross-countryanalysisfortheyears2020and2021,especiallyoncomparisonsbetweensurveysconductedduringtheCOVID-19crisisandothers.Moreover,particularlyin2020,internalmigrationflowswereobservedinthecon-textofthepandemic,oftenresultinginmigrationlossesinurbanareasandgainsinruralareas.However,thesetrendsappeartohavebeentemporary(González-Leonardoetal.2022;Roweetal.2023).Withtheincreasingavailabilityofpost-pandemicdata,itshouldbecomepossibletoassessmoreaccuratelytheimpactthattheCOVID-19crisishashadontherural-urbandivide.
Formoreinformation,see
/about/data-collection-and-production/
.
Togroupcountriesaccordingtotheirlevelofincomepercapita,theWorldBankdlassificationcorrespondingtotheyearofcollectionofthesurveydatawasused.
11?ILOWorkingPaper107
Nationaldefinitionsofurbanandruralareas
Thedistinctionbetweenurbanandruralareasusedinthispaperreliesonthenationaldefini-tionsofgeographicalareasadoptedbycountries.Differencescanbeobservedacrosscountriesinhowtheydefineruralareas,notablywithregardtothecriteriausedtoidentifytheintegrationofanareaintoanurbanunit.Forexample,until2020,theFrenchnationalstatisticaloffice-theNationalInstituteofStatisticsandEconomicStudies(INSEE)-definedruralareasasallcom-munesnotbelongingtoanurbanunit,itselfdefinedasagroupingofmorethan2,000inhab-itantsinanareawithacertaincontinuityofbuildings,afeaturethatischaracteristicof"towns"(D'Alessandro,LevyandRegnier2021).?incontrast,theclassificationdevelopedbytheBrazilianInstituteofGeographyandStatistics(IBGE)r
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