Population Reports' Q&As

Meeting the Urban Challenge

The Urban Poor

What contributes more to urban poverty, unemployment or employment in the informal labor market? Why?

Most urban poverty results not from unemployment but instead from the lack of well-paying, steady jobs. The unemployment rate itself is relatively low in urban areas of most developing countries (41, 100). For example, in 155 surveyed cities in developing countries, three-quarters had unemployment rates at or below 15% (157). Nevertheless, poverty has risen as fewer people can find steady jobs with adequate wages. As economic conditions worsen, a growing percentage of people shift from employment in the formal economy to work in the informal labor market. In 30 of 40 developing countries surveyed by the International Labor Organization (ILO) in 1999, employment in the urban informal sector constituted over one-third of total urban employment. Employment in the informal sector is less secure, and incomes are lower than in manufacturing and other formal-sector jobs (2, 28, 56).

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