Jobs and Migration Key to Addressing South Asia Inequality

October 9, 2014

WASHINGTON, October 9, 2014— Jobs and migration are supporting substantial upward mobility across and within generations in a South Asia that is a land of extremes of side-by-side extravagant wealth and appalling poverty, a World Bank report said.

Addressing Inequality in South Asia” shows that the gaps between rich and poor look moderate based on standard measures that focus on consumption per capita. But the picture is more mixed when considering inequality along non-monetary dimensions of well-being, such as child mortality or stunting.

“This report shows that the standard measures, such as the Gini index, do not go far enough in capturing the nature and extent of inequality in South Asia,” said Philippe Le Houérou, Vice President for the South Asia Region at the World Bank. “High inequality in human development outcomes calls for greater efforts in providing access to basic services, such as health care and sanitation, especially for the most disadvantaged population groups.”

Standard measures of inequality are increasing across the region – which includes Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka -- except in the smallest, and richest countries.  On non-monetary measures, the record is more mixed: the variation in health outcomes is increasing while gaps in education outcomes are stable or decreasing.

Inequality should not be looked at in a static manner, the report argues, but from a life-cycle perspective.  Well-being depends on opportunity in childhood, mobility in adulthood, and support throughout life.  Policies to address inequality should not aim at attaining a target level for some standard indicator of inequality such as the Gini index.  Rather, their focus should be on ensuring equality of opportunity, improving upward mobility and providing adequate support.

South Asia performs poorly in terms of opportunity, the report argues, with access to basic services partial at best, and often dependent on circumstances such as gender, location, or caste. On the other hand there is substantial upward mobility in the biggest countries in the region, and it is driven by jobs and migration. Mobility has been increasing over time, and it is high even among socially disadvantaged groups.

The quality of the support provided by government occupies an intermediate place. The South Asia region is home to some remarkable social protection programs, but the report claims that tax avoidance and evasion are pervasive and a large share of the tax revenue is spent on regressive subsidies.

“When thinking about addressing inequality, access to basic services and adequate safety nets come immediately to mind, but policies for job creation and urbanization are equally important” said Martin Rama, Chief Economist of the South Asia Region and one of the authors of the report.

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