1 Introduction 2

2 Framework: labor as the asset of the poor 4

  2.1 An accounting identity 5

  2.2 Labor is practically the only source of earnings for the poor 5

  2.3 Why the poor hold nothing else, and why their work pays little 6

3 Data 7

  3.1 Sources, coverage, and the harmonization of labor variables 7

  3.2 Alignment to reference-year population and to official poverty estimates 9

  3.3 The global welfare distribution 9

  3.4 Samples, recall periods and population coverage by variable 10

  3.5 Definitions and measurement caveats 11

4 Methodology for the counterfactual simulations 12

  4.1 The employment counterfactual 13

  4.2 The three earnings switches 13

  4.3 Caveats and limitations 15

5 The drivers of overall welfare growth 16

  5.1 Results for the global income distribution 16

  5.2 Country-level changes 18

  5.3 Who remains poor? Composition, selection and income effects 20

  5.4 Is the decline definitional? 21

6 The labor profile of the poor 23

  6.1 Employment: the extensive margin 23

  6.2 Hours: the intensive margin 25

  6.3 Labor income 27

  6.4 Sector of employment 29

  6.5 Employment status: Self- vs. wage-employment 29

  6.6 Education 31

  6.7 Gender differences 32

7 Counterfactual results 34

  7.1 The employment margin 35

  7.2 Earning counterfactuals: Education, employment status and sector 37

  7.3 Who benefits? The incidence of the gains across the distribution 39

8 Conclusion 41