Source: ECVH (2001), EEEI (2007) and ECVMAS (2012) – authors’ calculations. Note: The graph presents the marginal changes (point estimate and 95 percent confidence interval) in underemployment in 2012, using 2007 as a baseline, on a probit model. Regression also controls for age (quadratic form) and household size.

Ultimately, and in spite of the cataclysmic shock experienced in 2010, the analysis of the evolution of labor markets in Haiti finds few changes. Those changes are primarily due to the dynamics of the post-earthquake reconstruction, such as a temporary expansion of the labor demand in the construction and NGO sectors. Overall, Haitian labor markets are characterized by long-term stagnation. Acute challenges continue to impede Haitian labor markets’ ability to improve the welfare of the country’s people. With labor income a key vector of poverty reduction, the next section investigates its determinants in urban settings.

# **II. Shining Light on the Determinants of Labor Income in Urban Areas (2007-2012)**

While the definition of urban areas can be hard to reconcile, there is little denying that Haiti is rapidly urbanizing.<sup>10</sup> The World Bank’s World Development Indicators (WDI) for Haiti, show an urbanization rate of over 57 percent by 2014 (World Bank, 2015) and the UN demographic forecasts that Haiti’s urbanization rate will expand to 76 percent by 2050, when cities will host nearly 11 of the 14.3 million inhabitants (United Nations, 2014). While rural areas continue to remain important – especially for poverty reduction – urban areas are sure to play a critical role in Haiti’s future and its capacity to cash in on its demographic dividend given that almost 70 percent of Haiti population is less than 30 years old. The following section focuses on the labor income determinants in urban areas in 2007 and 2012; data limitations prevent the extension of the analysis to 2001.<sup>11</sup>

- A. Labor Income Increased between 2007 and 2012, but with Important Sectoral Disparities.

Both monthly and hourly labor income increased by about 11 percent annually between 2007 and 2012 in urban areas. Monthly income in the Metropolitan area grew at an annualized rate of 11 percent while other urban areas saw an increase of 7 percent. A more uniform increase of 11 to 13 percent occurred across other urban areas in the case of hourly incomes. In those areas, this increase was most notable in the private informal sector, where 50 percent of the workforce is employed. In Metropolitan areas, a wage expansion of close to 60 percent hints at the role played by labor dynamics linked to the reconstruction.

Hourly wages in the public and NGO sectors are higher than those in the private formal sector. The wage distribution in 2012 shows that average wages in the public and NGO sectors are significantly higher than

> 10 The _Haiti Poverty Assessment_ (World Bank, 2014a) found that 52 percent of Haitians lived in a rural setting in 2012, while UN data used by Glaeser (2013) refer to a 53 percent of the population as urban in 2011, with urban areas overtaking rural ones around 2008/9.

> 11 In addition to the Haiti Poverty Assessment (World Bank, 2014a), analysis focused on rural areas can be found in Coello, Oseni, Savrimootoo and Weiss, 2014.

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