# **Summary**

Labor markets are key drivers of poverty reduction. In Latin America, labor markets have been the main channel through which growth reduced poverty with higher labor income accounting for 49 percent of the reduction in poverty in the region in 2008-2013. Incidentally, understanding labor markets is critical to designing policies and programs aimed at reducing poverty. This is particularly true in a low-income fragile country such as Haiti. With close to close to 70 percent of the population under age 30 years, labor markets are bound to be central to defining Haiti’s future. Yet, labor analysis in Haiti has been constrained by the dearth of data and the focus on measuring the impact of the 2010 earthquake. However, while measuring the impact of the earthquake matters, over five years on, this question may be one more interesting to researchers than to inform policies and programs beyond the reconstruction.

The present paper contributes to answering this need by providing an overview of Haiti’s labor markets and the determinants of labor income over a decade, focusing on growing urban areas. The paper also contributes to the research on Haiti in general, as well as labor markets in fragile countries such as Haiti in particular through an unprecedented effort by the authors to harmonize three household surveys conducted between 2001 and 2012. Building on this exercise this paper provides new insights into the development of labor markets in a particularly turbulent decade for Haiti, one that was marked by the political crisis of 2004 and the earthquake of 2010.

In spite of the earthquake, the analysis shows that Haiti’s labor markets are characterized by continuity over the period. Somewhat surprisingly, its defining features remain overall unchanged in spite of the shock – pointing to heavy forces shaping economic and labor dynamics. Self-employment in low-productivity sectors such as commerce and construction remains the norm outside the farm sector. In a rapidly urbanizing Haiti, analysis of the determinants of labor income in urban settings echoes those findings, showing only modest improvement in workers’ endowments (such as education) or employment in more productive sectors. Additional analysis flags the important role of both the public and NGO sectors in the income increase, particularly for the lower end of the wage distribution.

The paper also finds a stable premium on education and an overall reduction of the gender wage gap, except in low productivity sectors, where this gap increased over the period to 60 percent. It also points to the persisting gender inequities – showing that on average, women in urban areas earned 23 percent less than men in 2012, a situation that had not changed since 2007.

Changes observed over the period are limited and those that stand out most carry no perspective for better labor market outcomes in the medium term. On the rural side, the significant rise in employment rates observed was due mainly to young people becoming unpaid workers in family businesses. On the urban side, income gains in the metropolitan area were driven mainly by the influx of foreign aid, raising questions of sustainability going forward in an environment where aid is already waning.

Overall, the analysis in this paper offers a new evidence-based analysis for the situation and highlights the remaining challenges and the fragility of the limited gains that Haiti has achieved. As such, the authors hope the paper will help in the crafting of policies that can directly address the country’s urgent difficulties and take advantage of its assets – and particularly its demographic dividend.

2