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This paper contributes to explain the cross-country heterogeneity of the poverty response to changes in economic growth. It does so by focusing on the structure of output growth. The paper presents a two-sector theoretical model that clarifies the mechanism through which the sectoral composition of growth and associated labor intensity can affect workers' wages and, thus, poverty alleviation. Then it presents cross-country empirical evidence that analyzes first, the differential poverty-reducing impact of sectoral growth at various levels of disaggregation, and the role of unskilled labor intensity in such differential impact. The paper finds evidence that not only the size of economic growth but also its composition matters for poverty alleviation, with the largest contributions from labor-intensive sectors (such as agriculture, construction, and manufacturing). The results are robust to the influence of outliers, alternative explanations, and various poverty measures.

Economic Growth --- Health, Nutrition and Population --- Household Income --- Household Survey --- Income --- Income Distribution --- Income Inequality --- Macroeconomics and Economic Growth --- Poor --- Poor Countries --- Poor Households --- Poor Individuals --- Population Policies --- Poverty --- Poverty Alleviation --- Poverty Data --- Poverty Index --- Poverty Line --- Poverty Measures --- Poverty Reducing --- Poverty Reduction --- Poverty Reduction Strategies --- Pro-Poor Growth --- Rural --- Rural Areas --- Rural Development --- Rural Poverty Reduction

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The relative contribution of a sector to poverty reduction is shown to depend on its direct and indirect growth effects as well as its participation effect. The paper assesses how these effects compare between agriculture and non-agriculture by reviewing the literature and by analyzing cross-country national accounts and poverty data from household surveys. Special attention is given to Sub-Saharan Africa. While the direct growth effect of agriculture on poverty reduction is likely to be smaller than that of non-agriculture (though not because of inherently inferior productivity growth), the indirect growth effect of agriculture (through its linkages with nonagriculture) appears substantial and at least as large as the reverse feedback effect. The poor participate much more in growth in the agricultural sector, especially in low-income countries, resulting in much larger poverty reduction impact. Together, these findings support the overall premise that enhancing agricultural productivity is the critical entry-point in designing effective poverty reduction strategies, including in Sub-Saharan Africa. Yet, to maximize the poverty reducing effects, the right agricultural technology and investments must be pursued, underscoring the need for much more country specific analysis of the structure and institutional organization of the rural economy in designing poverty reduction strategies.

Agricultural Development --- Agricultural Growth --- Agricultural Productivity --- Agricultural Productivity Growth --- Agricultural Sector --- Agricultural Technology --- Economic Growth --- Economic Theory and Research --- Health, Nutrition and Population --- Household Surveys --- Income --- Macroeconomics and Economic Growth --- Poor --- Poor People --- Poor Smallholder --- Population Policies --- Poverty --- Poverty Data --- Poverty Reducing --- Poverty Reduction --- Poverty Reduction Impact --- Poverty Reduction Strategies --- Pro-Poor Growth --- Rural --- Rural Development --- Rural Development Knowledge and Information Systems --- Rural Economy --- Rural Poverty Reduction