Table 2.4: Marginal percentage increase in per capita income due to employment variables

[The excluded reference categories are a household head and a spouse fully employed (at work and not underemployed), and working as wage earners (as opposed to self-employment) in the agriculture sector]

Coefficients underlined are significant at the 10% level. Coefficients not underlined are significant at the 5% level.

• 
  Underemployment: Having a head or spouse seriously underemployed (i.e., working less than 20 hours per week) reduces expected per capita income by about 30 percent in both urban and rural areas. Counting as zeroes the coefficients which are not statistically significant, milder underemployment (i.e., working between 20 and 39 hours a week) reduces per capita income by about 10 percent. Those who would like to work more tend to be poorer, although the impact is not always significant. Controlling for all the other variables, there is no definite direction of the impact of wanting to work more, but not being able to do so for health or family reasons, although in one case (spouses in rural areas in the September 1998 survey), the negative impact is very large.
  
• 
  Sector of activity: Having a head belonging to the construction, commerce, or transport sector brings in a gain in per capita income of about 30 percent as compared to working in agriculture (the excluded reference category). By contrast, households with heads working in services and mining/manufacturing/electricity do not do much better than households with heads in agriculture. In the case of services, this may be because a large part of this sector consists of informal and badly paid workers (in other words, the sector is highly heterogeneous). In the case of mining, manufacturing, and electricity, the result is more surprising. The impact of the spouse’s sector of activity tends to be smaller than that of the household head (many coefficients are not significant).
  
• 
  Position held: Self-employment versus salaried employment (the excluded category in the regression) is good in urban areas, and bad in rural areas. The difference can be explained by the fact that in urban areas, the self-employed include a larger number of professionals. As expected, being an employer generates a large gain in per capita income of about 70 percent. Also as expected, unpaid family work is associated with poverty. There is no systematic gain from being employed in the public sector as opposed to working in the private sector. A head working in a firm that has more than ten workers brings in a gain in per capita income of close to 20 percentage points. The results are again similar for heads and spouse, but with a lower level of statistical significance for spouses.
  

2.12. Reducing poverty through labor markets requires interventions not only on the quality of the jobs available, but also on the qualifications of workers, and it is difficult to disentangle both. A study by IPEA (1999) quoted in the draft I-PRSP of the GRH (2000) argues that the key problem in the labor market is the quality of the jobs available. The study states that 84 percent of the difference in labor income between Honduras and other Latin American countries is due to the lower quality of the jobs, the rest (16 percent) being due to the lower quality of the workers. It is not clear what must be understood from the above. While there is no doubt that the quality of many jobs in Honduras is low, the lack of qualification of the labor force may well be at the root of the problem. If it is, the policy option would be to improve the qualification of the workforce. There are certainly other factors affecting the quality of the jobs available in Honduras (some are reviewed in chapter 3). But one should be careful before interpreting the IPEA decomposition as implying that the qualification of the workers is not a key issue.