JAMAICA POVERTY ASSESSMENT © 2024 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, links/footnotes and other information shown in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Further permission required for reuse. Cover design and typesetting: Kilka Diseño Grafico Contents Acknowledgements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iix Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1. Trends in Poverty, Inequality, and Shared Prosperity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Lack of Sustained Poverty Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Shared Prosperity and Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Drivers of Poverty Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Risks and Challenges Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2. Poverty Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Geographical Distribution of Poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Individual and Household Characteristics of the Poor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Livelihoods and Sources of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Non-Monetary Poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3. Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Current Stock and Quality of Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Health and Nutritional Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Equity in Access to Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 4. Fiscal Incidence Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 The Fiscal System in Jamaica: Tax Revenues and Expenditures . . . . . . . . . . . . . . . . . . . . . . . 49 Fiscal Incidence Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Distributional Impacts of the Fiscal System in Jamaica . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Effects of Taxes and Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Incidence of Structural Social Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 5. Policy Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Economic Transformation for Lasting Poverty Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Strengthening Human Capital and Gender Equality for Poverty Reduction . . . . . . . . . . . . . . . . . 64 Fiscal Policy and Social Assistance as Powerful Tools to Reduce Poverty and Inequality . . . . . . . . . . 66 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Annex 1 – Jamaica’s Poverty Measurement Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Annex 2 – Fiscal Incidence Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Annex 3 – Additional Figures and Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Figures Figure 1.1: Poverty rate at national poverty line, 2000–2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Figure 1.2: Real GDP growth rates in Jamaica, LAC, and Caribbean small states, 2007-2021 (%, annualized) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 1.3: GDP per capita (constant 2017 PPP $), 2000-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 1.4: Semi-elasticity of poverty reduction, 2013-2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 1.5: Semi-elasticity of poverty reduction, 1989-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 1.6: Divergence of survey mean consumption growth from national accounts in Jamaica (%, annualized), 2007-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 1.7: Divergence of GDP deflator and CPI in Jamaica (%, annualized), 2007-2021 . . . . . . . . . . . . . . . . . . 11 Figure 1.8: Growth incidence curves (based on consumption), 2007-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 1.9: Shared prosperity in Jamaica and Dominican Republic, 2007-2021 (annualized growth, %) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 1.10: Shared prosperity, circa 2015-2020 (annualized growth, %). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 1.11: Gini index, 2000-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 1.12: Unemployment and poverty, 2007-2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Figure 1.13: Youth and total unemployment by sex, 2020-2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Figure 1.14: Job creation and growth by industry, 2012-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 1.15: Employment of bottom 40 in low productivity industries, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 1.16: Growth-distribution decomposition of poverty changes in Jamaica, 2003-2021 . . . . . . . . . . . . . . . 16 Figure 1.17: Population share benefitting from selected unearned income sources, by quintile, 2021 (% of population) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 1.18: Population share benefiting from private transfers, by quintile and poverty status, 2021 (% of population) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 1.19: Average amount of international remittances and domestic private transfers, by quintile and poverty status, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 1.20: Remittance inflows in Jamaica, Dominican Republic, Caribbean, and LAC, 1990-2021 (% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 1.21: Remittance inflows in LAC countries, 2021 (% of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 1.22: Inflation, 2001-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 1.23: Inflation, 2021-2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 2.1: Poverty rate, contribution to poverty, and population share, by area in 2018 and 2021 . . . . . . . . . . 23 Figure 2.2: Contribution to poverty, by region and urban/rural (%), 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Figure 2.3: Poverty rates by age group, 2019 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Figure 2.4: Educational attainment of household heads by quintile, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Figure 2.5: Educational attainment for children of household heads/spouse (ages 20-29) by quintile, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Figure 2.6: Share of total employment by industry and quintile, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Figure 2.7: Main source of livelihood, by poverty status, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 2.8: Occupation of household heads by poverty status, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 2.9: Unemployment rates by sex and level of education, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 2.10: Population out of the labor force by sex and level of education, 2021 . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 2.11: Unemployment rates among household heads age 15+, by poverty status and quintile, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Figure 2.12: Unemployment rates for population age 15+, by poverty status and quintile, 2021 . . . . . . . . . . . . 29 Figure 2.13: Unemployment rates (age 15-65) by poverty status and quintile, 2021 . . . . . . . . . . . . . . . . . . . . . 30 Figure 2.14: Population out of the labor force (age 15-65), by poverty status and quintile, 2021 . . . . . . . . . . . 30 Figure 2.15: Life expectancy at birth (years), 2000 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 2.16: Access to electricity (% of population), 2000 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 2.17: Access to at least basic drinking water services, 2000 and 2020 (% of population) . . . . . . . . . . . . 31 Figure 2.18: Using at least basic sanitation services (% of population), 2000 and 2020 . . . . . . . . . . . . . . . . . . . 31 Figure 3.1: Change in adult mortality rates (%), 2010-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Figure 3.2: Immunization, measles (% of children ages 12-23 months) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Figure 3.3: Share of COVID-19 confirmed cases and deaths by sex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Figure 3.4: Coverage of health insurance by quintile, 2018 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Figure 3.5: Educational attainment (ages 25-64), by sex, area, and quintile, 2021 . . . . . . . . . . . . . . . . . . . . . . . . 44 Figure 3.6: Quality of education, circa 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Figure 3.7: Divides in the level of web use sophistication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Figure 4.1: General government revenue (% GDP), 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Figure 4.2: General government expenditures (% GDP), 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Figure 4.3: Definition of CEQ income concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Figure 4.4: Inequality moving from market to final income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Figure 4.5: Poverty rates moving from market to consumable income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Figure 4.6: Progressivity of taxes and contributions (Kakwani index) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Figure 4.7: Marginal effects of taxes and contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Figure 4.8: Progressivity of transfers (Kakwani Index) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Figure 4.9: Marginal contributions of transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Figure 4.10: Distribution of transfer program spending, by quintile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Figure 4.11: Percentage of students who receive free meals at school, by quintile and education level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Figure 4.12: Auxiliary fees in secondary education by quintile (share of consumption) . . . . . . . . . . . . . . . . . . . . 58 Figure 4.13: Health subsidy incidence among injured and ill patients, by quintile (share of consumption per adult equivalent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Figure 4.14: Distribution of health service benefits by quintile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Figure 4.15: Out of pocket expenditures among injured and ill patients, by quintile (share of consumption expenditure per adult equivalent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Figure A3.1: Poverty rate at national poverty line, 1990 – 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Figure A3.2: Distribution of real expenditure per adult equivalent in 2013, 2019, and 2021. . . . . . . . . . . . . . . . 75 Figure A3.3: Share of jobs by informal and formal sectors, 2018-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Figure A3.4: Number of jobs by informal and formal sectors, 2018-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Figure A3.5: Share of nonagricultural jobs by age group and informal/ formal sectors, 2021 . . . . . . . . . . . . . . . 76 Figure A3.6: Share of nonagricultural jobs by area and informal/ formal sectors, 2021 . . . . . . . . . . . . . . . . . . . . 76 Figure A3.7: Remittance inflow growth (constant LCU), 2001-2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Figure A3.8: Population share benefiting from international remittances by quintile, 2013-2021 . . . . . . . . . . . 77 Figure A3.9: Population share benefiting from domestic private transfers by quintile, 2013-2021 . . . . . . . . . . 77 Figure A3.10: Remittances, average amount by quintile as share of the poverty line, 2013-2021 . . . . . . . . . . . 77 Figure A3.11: Private domestic transfers, average amount by quintile as share of the poverty line, 2013-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Figure A3.12: Distance to school and form of transportation, by poverty status . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Tables Table 2.1: Poverty rate and poverty contribution by household characteristics, 2018 and 2021 . . . . . . . . . . . . 25 Table 2.2: Access to electricity, drinking water, and sanitation by poverty status, quintile, and area, 2021 . . . . 32 Table 3.1: HCI and its components in Jamaica and benchmark countries, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Table 3.2: Net attendance rates by level of education, 2010 and 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Table 4.1: Total revenue of general government, 2018-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Table 4.2: Expenditure of general government by function, 2018-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Table A2.1: Progressivity and marginal contributions of Jamaica’s fiscal system . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Table A2.2: Definition of CEQ concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Table A2.3: Main social assistance programs and subsidies in Jamaica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Table A3.1: Poverty measures by area, region, and parish 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Table A3.2: Poverty measures by area and region 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Table A3.3: Poverty Measures by Household Characteristics, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Table A3.4: Poverty Measures by Household Characteristics, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Maps Map 2.1: Contribution to poverty by parish, 2018 (% of total poor) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Map 2.2: Poverty rates by parish, 2018 (% of population) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Map A3.1: Poverty Map – Poverty rates by Community, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Map A3.2: Poverty Map – Total population living in poverty by Community, 2012 . . . . . . . . . . . . . . . . . . . . . . . . 80 Boxes Box 1: Asset Based Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Box 2: Poverty Measurement in Jamaica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Box 3: Gender Equality in Jamaica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Acknowledgements The Poverty Assessment was co-led by Roy Katayama (Sr. Economist, ELCPV), Eliana Rubiano-Matulevich (Sr. Economist, ELCPV), and Maria Emilia Cucagna (Analyst, AFEGI). The team included Cecile Delcuvellerie (Consultant), Essama Nssah (Consultant), Andres M. Cesar (Consultant), Yasuka Tateishi (Consultant), Sergio Rivera (Consultant), Marlen Cardona Botero (Consultant), Pamela Gunio (Program Assistant, ELCPV) and Ana Carolina Leguizamo Baquero (Program Assistant, ELCPV). The report was prepared under the supervision and guidance of Carlos Rodriguez Castelan (Practice Manager, ELCPV), Ximena del Carpio (Practice Manager, ELCPV), Robert R. Taliercio (Regional Director, ELCDR), and Lilia Burunciuc (Country Director, LCC3C). The team thanks the peer reviewers Juan Carlos Parra Osorio (Sr. Economist, EAEPV), Maria Eugenia Genoni (Sr. Economist, EMNPV), and Gabriela Inchauste (Lead Economist, EAWPV) for their helpful comments. The team is also grateful for the valuable inputs received from E. Gail Richardson (Operations Manager, LCC3C), Luis-Felipe Lopez-Calva (Global Director, EPVDR), Nataliya Mylenko (Lead Country Economist, ELCDR), Tim Johnston (Program Leader, HCLDR), Karlene Francis (Senior Operations Officer, LCC3C), Rohan Longmore (Sr. Economist, ELCMU), Clemente Avila (Sr. Social Protection Economist, HLCSP), Ingrid Bjerke (Sr. Education Specialist, HLCED), Victoria Levin (Sr. Economist, HLCED), Claudia Muriel (Education Specialist, HLCED), Jose Romero (Economist, HSPJB), Ziva Razafintsalama (Sr. Rural Development Specialist, SLCAG), Hira Channa (Agriculture Specialist, SLCAG), and Elena Mora Lopez (Agriculture Analyst, SLCAG). The team thanks Suzette Johnson (Director of Policy Research, PIOJ) and Natalee Simpson (Director, Surveys Division, STATIN) for their collaboration and making the Jamaica Survey of Living Conditions and Labor Force Survey data among others available to the team. The team is also grateful for the helpful comments received from Easton Williams, Collette D. Robinson, Suzette Johnson, Nicole Allen, and Shelly Ann Edwards. JAMAICA POVERTY ix ASSESSMENT Abbreviations and Acronyms BIS Beneficiary Identification System MLSS Ministry of Labour and Social Security CARE COVID-19 Allocation of Resources for Employees NCD Non-Communicable Disease CEQ Commitment to Equity NEET Not in Education, Employment or Training CPI Consumer Price Index NHF National Health Fund CSEC Caribbean Secondary Education Certificate NIS National Insurance Scheme GDP Gross Domestic Product NPP National Policy on Poverty GFC Global Financial Crisis NPRP National Poverty Reduction Programme GKMA Greater Kingston Metropolitan Area OUC Other Urban Centers GOJ Government of Jamaica Programme of Advancement Through Health and PATH Education HCI Human Capital Index PER Public Expenditure Review HFPS High Frequency Phone Survey PIOJ Planning Institute of Jamaica ICT Information and Communications Technology PPP Purchasing Power Parity IMF International Monetary Fund STATIN Statistical Institute of Jamaica JADEP Jamaica Drug for the Elderly Programme UNICEF United Nations Children’s Fund JMD Jamaican Dollars VAT Value Added Tax JSLC Jamaica Survey of Living Conditions WBG World Bank Group LAYS Learning Adjusted Years of Schooling WDI World Development Indicators LAC Latin America and the Caribbean WHO World Health Organization LFS Labor Force Survey EXECUTIVE SUMMARY JAMAICA POVERTY Executive Summary xi ASSESSMENT In its quest to tackle poverty, Jamaica developed the National Policy on Poverty (NPP) and National Poverty Reduction Programme (NPRP) in 2017 . The NPRP was launched in March 2018 with implementation guided by medium-term programs developed on a rolling basis. The NPP and NRPR are aligned with the long-term national development plan known as Vision 2030 Jamaica, the Sustainable Development Goals, and sector strategies such as the Jamaica Social Protection Strategy. The NPP defines two policy goals: (i) eradicating extreme (food) poverty by 2022, and (ii) reducing the national poverty prevalence to less than 10 percent by 2030. Although Jamaica was closing in on these poverty targets in 2019, the adverse economic impacts of the COVID-19 pandemic setback progress. However, the government’s COVID-19 Allocation of Resources for Employees (CARE) Programme helped mitigate the negative impacts on households and businesses, and Jamaica’s economic recovery should place it back on track towards its 2030 poverty reduction target. Jamaica’s Poverty Roller Coaster Over the past decades, Jamaica has experienced periods of substantial poverty reduction and shared prosperity, only to have them reversed by major shocks . Poverty reduction has been volatile and temporary. From 1990 to 2000, the official poverty rate declined from 28.4 percent to 18.7 percent. It fell further to its historical low of 9.9 percent in 2007. As the economy contracted in the aftermath of the global financial crisis, Jamaica’s poverty rate more than doubled to 24.6 percent in 2013. Poverty rates subsequently fell to 11 percent in 2019 – just below 2008 levels – with the revival of economic growth, job creation and further expansion of the existing conditional cash transfer program. However, the poverty rate is estimated to have increased sharply in 2020 to about 21 percent, based on World Bank projections, as the COVID-19 pandemic led to a sudden stop in tourism. Due to the poverty rate volatility, achieving lasting poverty reduction remains a challenge . As of 2021, the official poverty rate indicates that 16.7 percent of the population in Jamaica lived below the national poverty line. This is still almost 8 percentage points below the last peak in 2013. However, relative to 2001, this represents a decline of 0.2 percentage point, meaning poverty was effectively at the same level as 20 years prior. While 2021 represented an early stage of Jamaica’s recovery from the COVID-19 pandemic’s economic impacts, this highlights the challenge of maintaining past gains in poverty reduction. Without higher and sustained inclusive economic growth, Jamaica risks getting stuck on a poverty roller coaster . The country’s economic growth has been persistently low and lacks resilience because of a concentration of economic activity in a low productivity services sector – namely tourism – that is sensitive to external shocks. Agriculture is another low productivity sector vulnerable to shocks, especially climate-related shocks. Real GDP expanded at an annual average of 0.8 percent between 1990 and 2019, far below the average of 2.7 percent for the Latin America and Caribbean (LAC) region. The corresponding real per capita GDP growth over the period was 0.6 percent. This has led to a widening of the real GDP per capita gap with peer countries. Jamaica’s macroeconomic achievements in fiscal consolidation and debt reduction have not translated into success at the micro level in terms of better jobs and sustained poverty reduction. Although jobs were created during periods of positive but low growth, they have generally been low productivity jobs that lack job security . These jobs did help increase the incomes of previously unemployed workers and lift households out of poverty. Despite the short-term benefits, the lack of job security has left many workers vulnerable to the impacts of shocks – as seen most recently with the pandemic. Labor market JAMAICA POVERTY Executive Summary xii ASSESSMENT vulnerability is particularly harmful to youth, creating vicious cycles of low income, employment instability, and diminished long-term confidence and aspirations. With respect to household consumption, growth incidence curves show that the poorest 40 percent of the population (the bottom 40), including those living below the poverty line, tend to benefit most during positive economic growth spells, but they are the hardest hit during economic downturns. Jamaica remains locked in a low growth equilibrium with low quality jobs, which makes many Jamaicans vulnerable to moving in and out of poverty. The limited number of good jobs offers little to entice highly educated and skilled individuals to remain in Jamaica, and their outmigration continues to provide a steady export of human capital to other countries. In pursuit of better opportunities for higher pay and career advancement in countries such as the UK, US, and Canada, the Jamaican diaspora has grown to over 1 million. This directly benefits the migrants and often indirectly benefits their families in Jamaica through remittances; however, the supply of educated individuals in the domestic labor force is constrained in supporting the emergence of higher productivity sectors and jobs. International remittances and redistribution, largely through private transfers, have played an important role in keeping Jamaicans out of poverty. The supplemental income helps recipients meet essential needs and smooth consumption. In addition to the massive increase in government transfers through the CARE Programme, the countercyclical surge in remittance inflows in 2020 and 2021, for example, helped mitigate the negative welfare impacts of the sharp economic contraction due to the COVID-19 pandemic, helping both rich and poor. In 2021, about 40 percent of the bottom quintile benefitted from remittances, compared to 50 percent of the second quintile and 55 percent for the top three quintiles. Remittances prevented an estimated 5 percent of the population from falling into poverty in 2021, and domestic transfers helped keep another 4 percent above the poverty line. These private transfers, both international and domestic, serve as a type of informal safety net for a wide swath of the population. Improved Human Capital for Lasting Poverty Reduction Jamaica has made remarkable progress on specific health indicators, but disruptions in basic services caused by the pandemic, the increase in non-communicable diseases (NCDs), and persistent inequalities in nutrition outcomes are areas of concern. The expansion of vaccination has substantially reduced childhood mortality, and nearly every birth is attended by skilled health personnel. However, the disruptions caused by the pandemic interrupted childhood vaccination efforts, setting vaccination rates back to levels below government targets and widening existing regional and socioeconomic gaps in the coverage of vaccines that require multiple doses. Despite significant improvements in nutrition indicators, the double burden of malnutrition is unequally distributed across socioeconomic groups in Jamaica. The coexistence of undernutrition and overweight among the youth is at least three times more common among low-income households, compared to their counterparts in the top quintile of the distribution. This phenomenon is explained by the heavy reliance on external markets, the vulnerability to external shocks that can affect the population’s nutritional status, and a shift toward less healthy diets, particularly of low-income households that cannot afford better food. Child malnutrition is a concern not only because of associated developmental delays but also because obese children are prone to developing NCDs, the leading cause of death for both women and men later in life. Jamaica has also made significant gains in educational access, including nearly universal coverage in primary school, but major gaps remain. Jamaican children on average complete 11.4 years of schooling by age 18, but JAMAICA POVERTY Executive Summary xiii ASSESSMENT those years are equivalent to only 7.1 years of learning, which is lower than the average for the LAC region and structural peers. Access to the best schools is strongly correlated with socioeconomic background in Jamaica, so this learning gap disproportionately impacts poor children. Among young men, poverty, lack of aspirations, violence, and low-quality instruction lead to poor educational outcomes; among girls, teenage pregnancy is one of the main factors that prevent educational participation and completion. Completion of secondary education and attendance at the tertiary level remain a challenge, particularly for young men, rural students, and the socioeconomically disadvantaged. Human capital losses affect an individual’s lifetime earnings trajectory and the chances of escaping poverty . According to the World Bank’s Human Capital Index (HCI), the future earnings potential of a typical child born today in Jamaica will be 53 percent of what they could have been with complete education and full health. Low learning levels start to show early and deteriorate over time. In 2018, only 65 percent of fourth-grade students acquired mastery of foundational skills in numeracy and the figure for literacy was 85 percent. Among secondary students, only 38 percent passed mathematics in the 2021 Caribbean Secondary Education Certificate (CSEC) examination, a decline of 9 percentage points compared with results in 2018. The quality of public health care and out-of-pocket spending, particularly on medicines, are challenges that disproportionately affect the poor . Long waiting times and high costs are the main obstacles to visiting health facilities, which tend to be more acute for people at the bottom of the distribution. Waiting times in public health facilities or maternity centers, where most low-income households receive care, are 2.5 times higher than those in private facilities, where richer households tend to seek treatment. In Jamaica, the poor are four times less likely than the non-poor to have health insurance. Despite the ending of public health fees, out-of-pocket spending on medicines represents an important burden for the poorest households. These differences are relevant, considering frequent unavailability of medications intended to treat specific conditions with high medical costs. The COVID-19 pandemic has exacerbated pre-existing gaps in health, education, and human capital accumulation . The World Bank estimates that the pandemic caused the loss of approximately 1.5 years (from 7.1 to 5.6) in learning-adjusted years of schooling in Jamaica, which translated into an average annual earning loss per student of US$1,099 (2017 PPP). For society, this entails a total lifetime earning loss of US$5.5 billion – a third of Jamaica’s annual GDP. Not all individuals were impacted in the same way. Evidence shows that students in the bottom quintiles were less likely to attend virtual classes due to limited access to information technology, subjecting them to steeper learning losses. Furthermore, remote learning in some areas was inadequate for many poor students, likely because they could not fully benefit from self-instruction due to the lack of family members or peers who could teach them digital skills. Need for Greater Efficiency of Social Spending As a share of GDP, social expenditures and general government revenues in Jamaica are on par with peer countries, but there is room to improve the fiscal system’s contribution to reducing poverty and inequality. The Jamaican fiscal system’s capacity to redistribute is limited because of the reliance on indirect taxes as well as social transfers’ small size and leakages. Direct taxes have a moderate redistributive effect; indirect taxes, on the other hand, tend to be neutral in terms of equality, partly because some food items that represent a larger JAMAICA POVERTY Executive Summary xiv ASSESSMENT share of lower-income households’ expenditures are exempt from the value-added tax (VAT). Although Jamaica’s public transfers are progressive, they are relatively small and benefits are extended to higher segments of the income distribution. In 2018, for example, 74.9 percent of households in the first quintile and 63.7 percent in the second reported having ever received Programme of Advancement Through Health and Education (PATH) benefits, compared to 35 percent in the top quintile (PIOJ 2018). With transfers going to higher quintiles, this mitigates the inequality reduction by the fiscal system. This report’s analysis reveals that Jamaica’s fiscal system has a moderate impact on reducing inequality and exhibits a poverty increasing effect. Apart from contributing to reducing inequality, direct transfers slightly decrease poverty. Nonetheless, this effect is more than offset by indirect taxes because consumers, regardless of their income level, pay the same fixed rate, and lower-income individuals tend to spend a larger portion of their incomes than higher-income households on goods subject to VAT. Exemptions on specific food items only appear to have a small equalizing effect. The moderate impact of social transfers on inequality and poverty reduction is partly explained by the small size of the programs. Taken together, government expenditures on education, health, and social protection are pro-poor, but room for improvement remains. Government spending on school feeding programs is progressive, but it does not reach the whole population of vulnerable students. Similarly, health expenditures appear to be pro-poor, yet the bottom quintile receives about 20 percent of total subsidies allocated for primary health care and about 18 percent of subsidies for inpatient service – roughly at or below what they would receive if subsidies were evenly allocated among quintiles. Although the wealthiest quintile receives a smaller portion as a share of income, individuals in the second and fourth quintiles seem to be obtaining the largest share of subsidies from the government. Economic Transformation for Lasting Poverty Reduction Jamaica needs an economic transformation to drive a shift to sustained higher growth, greater resilience to shocks, and better economic opportunities to support long-lasting poverty reduction. Boosting growth is essential to shifting from low- to high-productivity jobs; or conversely, higher productivity jobs are essential to attaining higher growth levels. To achieve sustainable development and shared prosperity, Jamaica must realize a higher growth path that is green, inclusive, and more diversified to reduce vulnerabilities to shocks. Building resilience to shocks will be critical to achieving lasting improvements in welfare and poverty reduction. Climate change is expected to increase the frequency and severity of natural disasters in the Caribbean, including Jamaica. Economic transformation and investment in climate change adaptation can help protect Jamaica’s capital stock and minimize future losses in output and welfare, increasing its economic and fiscal resilience to future shocks. The country development model must better exploit Jamaica’s comparative advantages, embrace innovation, and strengthen skills, including through the creation of jobs that help skilled, young, and educated workers stay in the country. The asset-based framework provides an organizing structure for analyzing the factors for household income generation that are fundamental for poverty reduction and shared prosperity in Jamaica. It integrates both macroeconomic and microeconomic dimensions to represent growth and the incidence of growth as jointly determined processes. This approach illuminates the interplay between asset accumulation, their intensity of use, and the returns to these assets, which are at the core of household income generation. The value of market JAMAICA POVERTY Executive Summary xv ASSESSMENT income can be supplemented by transfers received, affected by the set of prices of goods and services consumed, and modulated by positive and negative shocks. This framework can help identify strategic interventions critical for lasting poverty reduction and shared prosperity. Stimulating and sustaining inclusive economic growth will be critical to achieve permanent poverty reduction . Higher and more stable economic growth is needed to create better jobs for the bottom 40, to increase their resilience to shocks, and to reduce the large fluctuations in poverty. At the same time, economic growth can be viewed as the total outcome of the income generation capacity of all households. To move Jamaica to a path of sustainable growth, key aspects include harnessing the productive potential of the country’s youth by strengthening education and skill development, improving equitable access to quality health care, addressing gender inequalities in access to economic opportunity, and preventing youth from turning to crime. Fully harnessing the productive potential of Jamaica’s youth will be key to increasing the contribution of labor as well as the income-earning capacity of poor households. Employment services can expand their scope and play a key role in developing and implementing strategies to facilitate transitions to the labor market, with a focus on youth that face significant barriers to employment. This may include career and skills guidance, outreach campaigns to reach vulnerable youth, and re-designing job readiness training for youth. Complementary activities could also include sharing labor market information with students, teachers, and vocational counselors as well as educational institutions. Addressing the human capital losses generated by the pandemic will be important . COVID-19 negatively affected health and education outcomes; thus, it is important to address these losses because they can have long- lasting impacts on well-being. In terms of education, this includes focusing on students at the bottom quintiles and youth with the highest risk of dropping out of school. The effort should include practical training for teachers and school leaders to ensure both continuity in learning and support remediation through teaching at the right level using adaptive learning programs. Equally important will be improving incentives and awareness about the value of education, particularly among vulnerable youth with low educational aspirations. In the medium to long term, it is important to integrate digital skills for all students into the school curriculum from an early age and offer comprehensive packages that bundle life skills and business training for young entrepreneurs. Jamaica’s health system can deliver cost-effective care for poor people, and prevention programs can target several risk factors at the same time . Encouraging physical activity, promoting a healthy diet, and reducing the use of tobacco are the most effective interventions to prevent NCDs. A strong primary care health system, including screening and early treatment and control for NCDs, is key to tackling the shifting burden of disease faced by Jamaicans. School-based interventions can prevent childhood obesity and promote healthy lifestyles. Equally important is to work with the food industry to manufacture healthier products and use communication campaigns to tackle obesity. As with education, improving surveillance and monitoring will be key for targeting and for evaluating the effectiveness of interventions. Lastly, a simplification of Jamaica’s fiscal system, accompanied by improved targeting of social programs, can contribute to poverty reduction . A simpler system could reduce incentives for individuals and firms to remain in the informal sector and increase tax revenue. Moreover, in combination with improved targeting of social protection programs, a simplified tax system can help address distributional aspects. The National Health Fund (NHF) could expand coverage eligibility to cover more illnesses, particularly in the context of aging population and increased prevalence of NCDs. INTRODUCTION JAMAICA POVERTY Introduction 2 ASSESSMENT Jamaica has achieved episodes of significant poverty reduction and shared prosperity in recent decades, but the gains have been temporary and reversed when major shocks hit the economy. Between 1990 and 2007, the official poverty rate fell from 28.4 percent to 9.9 percent. However, making these gains permanent has been a challenge. Following the global financial crisis, poverty increased back to 24.3 percent in 2013. For Jamaica, the lack of permanent poverty reduction stems from an economic structure characterized by persistently low economic growth and low resilience to major shocks. The period 2007-2013, when poverty more than doubled, had four years of negative GDP growth driven by the global financial crisis, strict fiscal consolidation, weakening domestic demand, and Hurricane Sandy. Real GDP expanded at an annual average rate of 0.8 percent between 1990 and 2019, far below the LAC average of 2.7 percent. For Jamaica, the corresponding real per capita GDP growth was only 0.6 percent over the period, leading to a widening of the real GDP per capita gap with peer countries. Between 2013 and 2019, a period that coincided with successive IMF-led stabilization programs, Jamaican per capita GDP growth rose only slightly to an average 0.9 percent a year. On the heels of the global financial crisis in 2009, Jamaica’s government adopted a new strategic framework in defining its National Development Plan, known as Vision 2030 Jamaica. It is the first long-term strategic plan designed to put the country on a path to sustainable prosperity. It aims to address the factors that constrain productivity improvements and international competitiveness. These factors relate to: (i) inadequate institutions, (ii) poor infrastructure, (iii) poor public service delivery, and (iv) macroeconomic instability. Overall, Vision 2030 Jamaica seeks to create a secure and prosperous future for all Jamaicans. It is consistent with the World Bank Group’s goal of poverty reduction and shared prosperity on a livable planet. By 2030, policymakers aim to achieve the following four goals: (i) Jamaicans empowered to their fullest potential, (ii) a secure, cohesive, and just society, (iii) a prosperous economy, and (iv) a healthy natural environment. More broadly, Vision 2030 Jamaica is aligned with the Sustainable Development Goals. To strengthen its framework for tackling poverty, the Government of Jamaica developed the National Policy on Poverty (NPP) and National Poverty Reduction Programme (NPRP) in 2017. The NPRP was launched in March 2018 with implementation guided by medium-term programs developed on a rolling basis (2018-2021, 2021-2024). The NPP and NRPR are aligned with Vision 2030 Jamaica, the Sustainable Development Goals, and sector strategies such as the Jamaica Social Protection Strategy. The NPP defines two policy goals: (i) eradicating extreme (food) poverty by 2022 and (ii) reducing the national poverty prevalence to less than 10 percent by 2030. Although Jamaica was closing in on these poverty targets in 2019, the economic impacts of the COVID-19 pandemic setback progress. However, government interventions during the pandemic and Jamaica’s economic recovery should place it back on track towards its 2030 poverty reduction target. JAMAICA POVERTY Introduction 3 ASSESSMENT Box 1: Asset Based Framework Increasing household incomes is fundamental to poverty reduction and shared prosperity. However, poor households face significant hurdles in accessing good jobs and achieving higher incomes. Poor households are typically employed in economic activities with low returns, and they have limited assets, making it challenging to shift to employment with higher returns, such as a better-paying formal sector job or a successful entrepreneurial endeavor. The asset-based framework provides an organizing structure for analyzing the factors for household income generation. In this framework, household market income is a function of the assets owned or accessible to a household, the intensity of their use, and the market returns to those assets. The value of market income can be supplemented by transfers received and affected by the set of prices of goods and services consumed. Negative shocks can reduce overall income, while positive shocks could boost it. At an aggregate level, economic growth can be viewed as a function of the income generation capacity of households. The framework can help identify potential constraints and opportunities for poverty reduction and shared prosperity (Lopez-Calva and Rodriguez-Castelan 2016; Cord et al. 2015). Asset-Based Framework for Household Market Income Generation Growth ks oc Inte ts h sse ns lS it Tra fa rna nsf yo no Exte ers fu Accumulatio se of Household Returns Transfers Household to assets assets market Intensity income market income = Accumulation of assets x of use of assets x + x External Shocks Re Prices Prices tu s r n s to a s se t Prices Equity Source: Lopez-Calva and Rodriguez-Castelan 2016 A variety of assets can be considered in this framework. Assets can include human capital (such as education, experience, and good health), physical capital (such as land and equipment), financial capital (such as savings, equity holdings), natural capital (such as soil quality, forests, water), and social capital (such as social networks). Intensity of use is important because simply possessing assets will not generate income unless utilized. A well-educated, able-bodied person who only works part-time would be an example of low intensity of use of a human capital asset for income generation. JAMAICA POVERTY Introduction 4 ASSESSMENT Jamaica has experienced a gradual shift in the structure of production. From 1995 to 2001, agriculture’s share of GDP fell from 9 percent to 6 percent; industry’s share fell from 37 percent to about 31 percent; and services’ share increased from 54 percent to about 63 percent (WBG 2003). Over the past two decades, manufacturing declined steadily, reflecting a loss in international competitiveness. As a result of this structural shift, much of the economic activity is concentrated in the services sector, dominated by tourism (WBG 2022b). From 2002 to 2019, agriculture’s contribution to GDP stayed between 4.6 and 6.6 percent, with an average of about 6 percent. Over the same period, industry’s contribution ranged from about 18 to 22 percent, with an average of 20 percent. The service sector’s contribution ranged from 59 to 68 percent, with an average of 64 percent. Looking at the past two decades or so, Jamaica’s economic performance has been volatile. Achieving a high level of sustained growth has remained an elusive goal. Several structural factors have been identified as major constraints on the country’s socioeconomic performance. These include: (i) low productivity, (ii) high levels of crime and violence, and (iii) high vulnerability and low resilience to shocks. Jamaica’s total factor productivity has been declining for more than 30 years. Low productivity leads to limited competitiveness (i.e., low efficiency in the use of factors of production). Jamaican violent crime rates are among the highest in the world. High prevalence of violent crime deters investment by creating an insecure business environment, erodes human capital, and diverts public and private resources from welfare-enhancing activities (WBG 2022b). Finally, Jamaica is extremely vulnerable to natural disasters because of its location in the world’s second most vulnerable region after the Asia Pacific (IMF, 2018). Exposure to frequent disasters can disrupt a country’s efforts to achieve high and sustainable economic growth (İnci and Franz 2017). The asset-based framework integrates both macroeconomic and microeconomic dimensions to represent growth and the incidence of growth as jointly determined processes. The framework (see Box 1) facilitates an explanation not only of the ways macro factors affect income growth among different population groups but also the ways the distribution of assets across groups may determine the capacity of these groups to contribute to overall growth. In the short run, changes in households’ income-generating capacity depend mostly on the macroeconomic variables that influence labor demand across sectors, relative prices (returns), and the intensity of the use of assets. Market income can be supplemented by transfers received and affected by the set of prices of goods and services consumed. Negative shocks can reduce overall income, while positive shocks could boost it. In the long run, the main drivers of income growth will be the level and distribution of the assets people own and accumulate as well as the intensity with which the assets are used and the volume of associated returns, which will reflect the productivity of the assets. (Cord et al. 2015, citing Bussolo and López-Calva 2014). For this poverty assessment, the asset-based framework can help link welfare outcomes to the productive capacity of households, interactions with macroeconomic conditions, and the impact of external shocks. In Jamaica, human capital is the main and often the only asset of the poor, motivating a deep dive (in Chapter 3) into its distribution among different socioeconomic groups, the intensity of use, and estimates of returns to education. Since government social spending on education and health can greatly influence households’ accumulation of human capital assets, this motivates a deeper dive (in Chapter 4) into the fiscal incidence analysis of these elements. The fiscal incidence of taxes and transfers is also examined because of their potential impacts, both positive and negative, on poor and vulnerable households, complementing the distributional analysis of private transfers in the form of international remittances and domestic transfers examined in the first chapter. Although dwarfed by the scale of international remittances, public transfers through government safety net programs still play an important role for poor households that do not receive private transfers. JAMAICA POVERTY Introduction 5 ASSESSMENT This report is organized as follows. Chapter 1 documents trends in Jamaica’s poverty, inequality, and shared prosperity and presents the main drivers of poverty reduction along with the risks and challenges to sustaining poverty reduction. Chapter 2 provides an updated profile of Jamaican poverty, examining its distribution by geographical areas and by demographic and socioeconomic characteristics. Chapter 3 assesses the state of human capital in Jamaica, as measured by health, nutrition, and education indicators, and its role in poverty reduction and shared prosperity. The analysis describes the achievements and the variation across socioeconomic groups. Chapter 4 examines the welfare incidence of government spending and tax policy, which is essential for defining fiscal reforms that can contribute to poverty reduction. In each chapter, the distributional analysis provides the basis for the policy recommendations formulated in Chapter 5. TRENDS IN POVERTY, INEQUALITY, AND SHARED PROSPERITY JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 7 ASSESSMENT • Despite periods of substantial poverty reduction as measured by national poverty measures, a lack of resilience to major shocks has made permanent reductions in poverty elusive. Both poverty and inequality have been volatile over the past two decades. • The poorest 40 percent of the population (the bottom 40), including those living below the poverty line, tend to benefit the most during periods of economic growth but suffer the most during economic downturns. • Jobs were created during periods of low growth, but they have generally been low productivity positions that lack job security. While low productivity jobs have provided short-term benefits for households, the lack of job security has left these workers vulnerable to the impacts of shocks, as most recently seen with the COVID-19 pandemic. • In Jamaica, an economic transformation is needed to drive a shift to sustained higher growth, greater resilience to shocks, and better economic opportunities to support long-lasting poverty reduction. Over the past two decades, Jamaica has experienced periods of poverty reduction and shared prosperity, only to have them reversed by major shocks. In 2021, 16.7 percent of the population in Jamaica lived below the national poverty line.1 This is essentially the same level as 20 years earlier, with only a 0.2 percentage point decline relative to 2001 (see Box 2 or Annex 1 for a summary of the official poverty measurement methodology and comparability). However, the poverty trend has exhibited significant fluctuations. From 1990 to 2000, the official poverty rate declined from 28.4 percent to 18.7 percent. The poverty rate fell further to its historical low of 9.9 percent in 2007 (Figure 1.1). Since the global financial crisis (GFC) in 2008, no further gains in poverty reduction have materialized. As Jamaica’s economy contracted in the aftermath of the GFC, the poverty rate more than doubled to 24.6 percent in 2013. Poverty rates fell to 11 percent in 2019 – just below 2008 levels – with the revival of economic growth, renewed job creation, and further expansion of the conditional cash transfer program. In the first year of the COVID-19 pandemic, its economic impacts once again reversed years of poverty reduction. The estimated poverty rate increased sharply in 2020 as the COVID-19 pandemic led to a sudden stop in tourism. Projections based on per capita GDP suggest the poverty rate rose to 21.12 percent in 2020. Jamaicans lost jobs and dropped out of the labor market, sustaining household welfare losses through reductions in labor income. Unemployment rose from 7.3 percent in January 2020 to 12.6 percent in July 2020. Effective income protection mechanisms for workers are lacking. While severance payments exist in Jamaica’s legal framework, the system is often ineffective, especially during crises because it is an unfunded liability for employers (WBG 2012). Immediate negative impacts were concentrated among informal workers (35 percent of wage earners) and workers in the tourism, wholesale and retail trade, and related service sectors – taken together, 40 percent of the workforce (WBG 2022b). 1 Unless otherwise indicated, the poverty indicators in this Poverty Assessment are based on Jamaica’s official poverty measurement methodology and calculate the share of individuals living below the poverty line. See Annex 1 for additional details on the poverty measurement methodology. 2 The JSLC survey was not conducted in 2020, and poverty in 2020 was estimated by the World Bank using the observed growth semi- elasticity of poverty reduction in Jamaica. The previous 2020 poverty estimate was 23 percent, as reported in the Jamaica Systematic Country Diagnostic, but the poverty estimate was recalculated based on GDP revisions. JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 8 ASSESSMENT Figure 1.1: Poverty rate at national poverty line, 2000–20213 40 National Rural 35 Urban (Modeled) 30 Poverty rate (%) 25 20 15 10 5 0 2000 2005 2010 2015 2020 Source: PIOJ and WB staff estimates using JSLC As the economic recovery progressed, the unemployment rate dropped to historical lows, reaching 6 percent in April 2022 and 4 .5 percent in April 2023 . However, employment quality was negatively impacted. The formal sector shed 11.4 percent of jobs in October 2020 (year on year), compared to 5.4 percent in the informal nonagricultural sector. Agricultural employment remained stable. In October 2021, job creation in the formal sector lagged the informal nonagricultural sector, 6.3 percent vs. 9.3 percent year on year (STATIN 2022, see Annex 3). The High-Frequency Phone Survey (HFPS) from December 2021 also indicated higher informality and fewer average hours worked relative to pre-pandemic levels (WBG and UNDP 2022). The recovery has been uneven, especially for young females, whose unemployment rate lagged at 15.9 percent in April 2022. The poverty impact of these shocks likely would have been more severe without government interventions. In both rural and urban areas,4 poverty has fluctuated in tandem with the national trends. In rural areas, the poverty rate fell from 37.5 percent in 1990 to 15.3 percent in 2007, then increased to 31.3 percent in 2013 (Figure 1.1). Rural poverty was more than halved between 2013 and 2019, declining sharply from 31.3 to 14.2 percent. As of 2021, the rural poverty rate stood at 22.1 percent after an expected spike in 2020 due to the pandemic. Similarly, urban poverty fell from 19.5 percent in 1990 to 5.1 percent in 2007, rose to 18.9 percent in 2013, and fell to 8.4 percent in 2019. The latest estimate of urban poverty stood at 12.4 percent in 2021, with the poverty rate at 10.4 percent for the Greater Kingston Metropolitan Area (GKMA) and 15.5 percent for other urban centers (OUC). In 2021, the total amount needed to lift all the poor above the poverty line, assuming perfect targeting, was estimated at JMD 26 .6 billion, or about 1 .2 percent of GDP. The depth of poverty in 2021, as measured by the poverty gap index (FGT1), was 4.4 percent of the poverty line, up from 3.1 percent in 2018 and down from the recent peak in 2013 of 8.2 percent. The severity of poverty, as measured by the squared poverty gap (FGT2), was 1.8, up from 1.2 in 2018, indicating welfare losses among Jamaicans further below the poverty line (Tables A3.1 and A3.2 in Annex 3). 3 JSLC was not fielded in 2020 due to COVID-19, so the poverty rate in 2020 is estimated by the WB using the observed growth semi- elasticity of poverty reduction in Jamaica. 4 Jamaica’s urban areas include the Greater Kingston Metropolitan Area (GKMA) and other urban centers (OUC). GKMA consists of the enumeration districts in Kingston, urban St. Andrew, Spanish Town, and Portmore. The OUC group includes all other urban areas that are not included in the GKMA. All other areas constitute rural areas. (https://statinja.gov.jm/pdf/Labour.pdf) JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 9 ASSESSMENT Box 2: Poverty Measurement in Jamaica Jamaica’s official poverty measurement methodology uses a welfare aggregate defined as household consumption expenditure per adult equivalent, where the adult equivalence scales for household members are defined by age and sex. The poverty lines are defined by area – GKMA, OUC, and rural areas. All three poverty lines are updated annually by the increase in the weighted average of the monthly CPI based on the share of households in the survey. The ratios between the GKMA, OUC, and rural poverty lines remain constant over time. The adult equivalent poverty lines in 2018 were JMD 565/day or US$7.75/day (2017 PPP) for GKMA, JMD 539/day or US$7.38/day for OUC, and JMD 502/day or US$6.87/day for rural areas. Starting in 2018, post-stratified weights were introduced in the JSLC and used for poverty calculations. Although not strictly comparable with previous estimates, as noted by PIOJ, the 2018 national poverty estimate with the new post-stratified weight was only 0.1 percentage point lower than the national estimate using the old weights. The JSLC has been collected since 1989, and the same poverty measurement methodology has been applied to the annual series, providing a generally comparable series over the three decades. However, methodology updates should be considered to incorporate the latest international best practices. See Annex 1 for further details on the official measurement methodology and potential improvements. Lack of Sustained Poverty Reduction Overall progress in poverty reduction over the past two decades has stalled as major shocks reversed prior gains. The national poverty rates were similar in 2021 (16.7 percent) and 2001 (16.9 percent). The rates have fluctuated between 10 percent and 20 percent for most of the past two decades, with only a few years above this range. The lowest poverty level was achieved in 2007 (9.9 percent), but reaching levels below 10 percent again has been a challenge. A notable feature of Jamaica’s episodes of poverty reduction is that they occurred in a context of low economic growth. Real GDP expanded by an annual average of 1.1 percent between 2013 and 2019, slightly above the average of 1.0 percent for the Latin America and Caribbean (LAC) region, but during the 2007-2013 and 2019- 2021 periods, Jamaica’s average growth rates were much lower than the averages for LAC and Caribbean small states (Figure 1.2). Real per capital GDP has been relatively flat in Jamaica over the past two decades, lagging the average growth for LAC and peer countries, such as the Dominican Republic (Figure 1.3). Previous analyses attributed this “poverty reduction without growth” to a combination of factors, including underestimation of output because of the economy’s increasing informality, declines in inflation and the relative price of food, rising real wages, and significant growth in remittances (Word Bank 2004 and 2013). Another part of the explanation could involve improvements in social protections systems (Word Bank 2019).5 These analyses predicted that these factors would be unlikely to support poverty reduction in the future without substantial and sustained growth. 5 In simulating the impact of social assistance, the 2019 Social Protection PER found incremental reductions in poverty as benefits increased and coverage expanded. JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 10 ASSESSMENT Figure 1.2: Real GDP growth rates in Jamaica, LAC, and Figure 1.3: GDP per capita (constant 2017 PPP $), Caribbean small states (%, annualized), 2007-2021 2000-2021 3.0% 20000 15000 1.1% 1.0% 0.8% 0.4% 10000 - 0.3% 5000 - 0.8% 0 2007 2017 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 2018 2019 2020 2021 - 2.3% - 3.0% 2007-2013 2013-2019 2019-2021 Jamaica Dominican Republic Jamaica LAC Caribbean Small States Upper Middle Income LAC Source: WB staff estimates; WDI Source: WDI Due to relatively large changes in poverty in response to low levels of economic growth, the growth semi- elasticity of poverty reduction for Jamaica is abnormally high. The growth semi-elasticity of poverty reduction represents the percentage point change in the poverty rate relative to a 1 percent change in in per capita GDP. During the 2013-2019 period, the semi-elasticity was extremely high at -2.2; that is, a decline of 2.2 percentage points for every 1 percent increase in per capita GDP (as depicted by the slope in Figure 1.4). However, this is a double-edged sword. A 1 percent decrease in per capita GDP is associated with an increase in poverty of 2.2 percentage points. The semi-elasticity of -1.0 for the period 1989 to 2021 (Figure 1.5) is still high. Figure 1.4: Semi-elasticity of poverty reduction, Figure 1.5: Semi-elasticity of poverty reduction, 2013-2019 1989-2021 .25 .5 .4 .2 .3 .15 .2 .1 .1 12.62 12.64 12.66 12.68 12.45 12.5 12.55 12.6 12.65 12.7 log (GDP per capita) log (GDP per capita) Poverty Fitted values Poverty Fitted values slope= -2.200 ; R-squared = 0.881 slope= -1.000 ; R-squared = 0.465 Source: WB staff estimates; WDI and JSLC (2013-2019) Source: WB staff estimates; WDI and JSLC (1989-2021) Measurement issues may offer a partial explanation for these high elasticities. A comparison of per capita GDP growth rates from national accounts and per capita consumption growth rates from household surveys indicates differences of several percentage points. During the 2013-2019 period, national accounts show real per capita GDP growth averaged 0.9 percent, while survey data show real mean per capita consumption growth averaged JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 11 ASSESSMENT 3.7 percent. Real per capita private consumption growth in the national accounts was even lower than per capita GDP growth (Figure 1.6). The divergence can be explained in part by the difference between the GDP deflator and CPI trajectories over time. In the 2007-2013 period, the annualized percent increase in the CPI used to update the poverty line (or consumption aggregate in the household survey) outpaced the annualized increase in the GDP deflator by an average 2.3 percentage points, explaining more negative annualized growth in household consumption (Figure 1.7). For the subsequent periods, this helps explain part of the divergence, but other factors would be needed to account for the differences. Figure 1.6: Divergence of survey mean consumption Figure 1.7: Divergence of GDP deflator and CPI in growth from national accounts in Jamaica Jamaica (%, annualized), 2007-2021 (%, annualized), 2007-2021 3.8 3.7 1.0 1.6 1.3 0.9 0.9 0.7 0.1 -1.3 -1.3 -1.7 -3.2 -3.2 -4.0 -3.8 -2.3 -5.7 2007-2013 2013-2019 2019-2021 Real mean consumption per adult equivalent - JSLC survey 2007-2013 2013-2019 2019-2021 Real mean consumption per capita - JSLC survey Difference in GDP deflator and CPI annualized growth GDP per capita (constant LCU) - national accounts GDP per capita (constant LCU) - national accounts Private consumption per capita (constant LCU) - national accounts Source: WB staff estimates using JSLC; WDI Source: WB staff estimates; WDI With respect to household consumption, the poor and bottom 40 tend to benefit the most during positive spells of economic growth, but they are the hardest hit during downturns. During the 2007-2013 and 2019- 2021 negative spells, the lower percentiles of per capital household consumption fared worse than the rest of the distribution, as depicted by the upward slope of the growth incidence curves (GIC) in Figure 1.8, and worse than the growth in mean consumption (-4 percent). During the positive spell in 2013-2019, the lower quintiles of the distribution fared better than the rest of distribution and the growth in mean consumption (3.8 percent). As discussed in the next section on drivers of poverty reduction, job creation was inclusive of the bottom 40, supporting the faster growth observed in the lower end of the GIC for 2013-2019. By contrast, the other GICs in Figure 1.8 suggest that job losses tend to hit the welfare of the bottom 40 much harder when the economy contracts. JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 12 ASSESSMENT Figure 1.8: Growth incidence curves (based on consumption), 2007-2021 2007-2013 2013-2019 2019-2021 Annualized consumption growth (%) Annualized consumption growth (%) Annualized consumption growth (%) 8 8 8 6 6 6 4 4 4 2 2 2 0 0 0 −2 −2 −2 −4 −4 −4 −6 −6 −6 −8 −8 −8 −10 −10 −10 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 Percentile Percentile Percentile GIC: national 2007−2013 GIC: national 2013−2019 GIC: national 2019−2021 Growth rate in mean Growth rate in mean Growth rate in mean Source: WB staff estimates using JSLC (2007, 2013, 2019, 2021) Shared Prosperity and Inequality In Jamaica, shared prosperity6 suffered in the aftermath of the GFC of 2008 and the COVID-19 pandemic of 2020 but improved in the years leading up to the pandemic . Between 2007 and 2013, average per capita household consumption for Jamaica’s bottom 40 shrank more than 6 percent a year, while the total population’s average declined 4 percent a year (Figure 1.9). This contrasts with LAC and peers like the Dominican Republic, where the bottom 40 fared better than the overall population over a similar period. As the Jamaican economy started to recover between 2013 and 2018, the bottom 40 saw average consumption grow 6.6 percent a year, much faster than the total population average of 3.5 percent and somewhat faster than the peer countries’ bottom 40. Between 2018 and 2021, average growth was -2.3 percent for Jamaica’s bottom 40 and 2.4 percent for the total population. While the bottom 40 tends to benefit during good times in Jamaica, the segment takes a harder hit during economic downturns. Jamaica’s shared prosperity premium has flipped between positive and negative. The premium is the difference between the poorest 40 percent and the entire population in the average growth in consumption or income. Jamaica’s shared prosperity premium varied from -2.3 (2007-2013) to 3.0 (2013-2018) to -4.7 (2018-2021) (Figure 1.9). This contrasts with the Dominican Republic, which maintained positive average growth for both the bottom 40 (ranging from 0.9 percent to 5.2 percent) and shared prosperity premium (0.9 to 2.7) from 2006 to 2021. For the five-year span 2016-2021, Jamaica’s average growth in consumption for the total population (3.6 percent) was higher than for bottom 40 (0.6 percent) (Figure 1.10), yielding a prosperity premium of -3.0. 6 Shared prosperity indicators measure the extent to which economic growth is inclusive by focusing on household consumption (or income) growth among the poorest population segment rather than on total growth. Shared prosperity focuses on the poorest 40 percent of a country’s population (the bottom 40) and is defined as the annualized growth rate of their mean household per capita consumption or income. The shared prosperity premium is the difference between the poorest 40 percent and the entire population in average growth in consumption (income). Shared prosperity and the shared prosperity premium are important indicators of inclusion and well-being that correlate with reductions in poverty and inequality. JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 13 ASSESSMENT Figure 1.9: Shared prosperity in Jamaica and Figure 1.10: Shared prosperity, circa 2015-2020 Dominican Republic, 2007-2021 (annualized growth, %) (annualized growth, %) 8 10.0 6 8.0 4 6.0 2 4.0 JAM 0 2.0 Population -2 0.0 -4 CRI GEO DOM -2.0 -6 -4.0 -8 2007-2013 2013-2018 2018-2021 2006-2011 2011-2016 2017-2021 -6.0 Jamaica Dominican Republic -8.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 Bottom 40 Total population Shared prosperity premium Bottom 40 Source: Global Database of Shared Prosperity; WB staff estimates Source: Global Database of Shared Prosperity (11th edition, circa 2015-20); using JSLC WB staff estimates using JSLC (2016-2021) Due to the resulting distributional changes, inequality measures have also varied in recent decades. Inequality in Jamaica, as measured by the Gini index, has been moderate, fluctuating between 35 and 40 for most of the past 20 years, with brief rises above 40 in 2002, 2013, and 2021. With greater welfare losses among the less well off, the Gini increased during economic downturns (Figure 1.11). Similarly, inequality has fallen during positive growth spells as greater consumption growth for the bottom 40 helped narrow the gap. In 2018, the Gini index in Jamaica was down to 36, relatively low for the LAC region.7 Figure 1.11: Gini index, 2000-2021 43 42 41 40 39 38 37 36 35 34 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2021 Source: PIOJ and WB staff estimates using JSLC 7 Consumption-based measures of the Gini are typically lower than income-based measures used in most of the LAC region. JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 14 ASSESSMENT Drivers of Poverty Changes Greater employment opportunities supported poverty reduction leading up to the COVID-19 pandemic. The volatility in poverty rates before and after the GFC closely tracks fluctuations in unemployment rates, suggesting that job creation was a major driver of poverty reduction (Figure 1.12). As the unemployment rate rose from 9.7 percent in 2007 to 15.2 percent in 2013 due to the economic contraction following the GFC, the poverty rate also increased from 9.9 percent to 24.6 percent over the same period. After peaking in 2013, unemployment fell to 7.7 percent and poverty declined to 11 percent in 2019. The larger proportional changes in poverty can be attributed to the fact that workers often support several household members, as indicated by a total dependency ratio of 48. The unemployment rate spiked to 12.6 percent in the third quarter of 2020 but fell to 7.1 percent by the end of 2021, below pre-pandemic levels (Figure 1.13). The expansion of employment during periods of positive economic growth has been inclusive for the bottom 40, contributing to increases in earned income and welfare improvements. Sectors with low productivity but slightly faster growth, such as hotels/restaurants and construction, have led job creation for the poor and bottom 40 percent of the consumption distribution (Figures 1.14 and 1.15). In addition, above average growth in the agriculture, forestry, and fishing sector, an important source of livelihoods for the bottom 40, contributed to improving welfare in rural areas. Substantial job creation materialized from relatively low levels of economic growth. Conversely, the expansion of low productivity jobs has made only a limited contribution to overall GDP growth (WBG 2022, CAPRI 2023). Figure 1.12: Unemployment and poverty, 2007-2022 Figure 1.13: Youth and total unemployment by sex, 2020-2022 35 18 30 30 15 25 Unemployment rate (%) 25 Poverty rate (%) 12 20 20 9 15 15 6 10 10 3 5 5 0 - 0 2007 2017 2020* 2022** 2008 2009 2010 2012 2013 2015 2016 2018 2019 2021 January2020 July 2020 January2021 July 2021 January2022 July 2022 Unemployment rate - total Youth unemployment rate - total Unemployment rate (%) Poverty rate Male unemployment rate Male youth unemployment rate Female unemployment rate Female youth unemployment rate Poverty (modeled) Source: STATIN, PIOJ, and WB staff estimates Source: STATIN * avg. of 3rd and 4th quarter; ** avg. of first 3 quarters Sectors that performed better than average created jobs, including for the bottom 40. Industries that employ a large share of the poor and bottom 40 are agriculture; government and other services; retail trade and repairs; construction; and hotels and restaurants (Figure 1.15). Between 2012 and 2018, annualized real growth in value added was higher than average in the following industries: agriculture (1.9 percent), hotel/restaurants (2.3 percent), construction (1.6 percent), and mining and quarrying (4.4 percent). Job creation was driven by JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 15 ASSESSMENT hotel/restaurants and construction. Mining performed well, but the number of jobs for the bottom 40 is limited (Figure 1.15). Figure 1.14: Job creation and growth by industry, Figure 1.15: Employment of bottom 40 in low 2012-2018 productivity industries, 2018 Real Estate & Business Avtivities 4000K Electricity & Water Supply Value added per worker (2007 prices), 2018 Hotels & Restaurants 3500K Mining & Quarrying 20K Construction 3000K Job creation, 2012-2018 Government & Other Services 2500K 2000K 10K Transport, Storage & Communication 1500K Real Estate & Business Avtivities Median Manufacturing Mining & Quarrying Trade, Repairs, Installation Transport, Storage & Communication 1000K 0K Construction Government & Finance & Insurance Services Manufacturing Others Services 500K Agriculture, Forestry & Fishing Average Hotel & Restaurants Agriculture, Forestry & Fishing 0K 0 1 2 3 4 0 5 10 15 20 25 Value added real growth, annualized (%), 2012-2018 Share of employment B40 (%), 2018 Source: WB calculations based on LFS and national accounts (STATIN) Source: WB calculations based on LFS and national accounts (STATIN) Note: Circle size represents the industry share of the total bottom 40 Note: Circle size represents annual growth rate 2012-2018. employed labor force. Low-productivity, informal jobs tend to be insecure and low quality, so the poor and vulnerable are more likely to suffer job losses during economic downturns. Most employment in Jamaica is informal. In October 2021, about 56 percent of jobs were in the informal sector, with 40 percent of workers in informal non-agricultural jobs8 and 16 percent in agricultural jobs, which are mostly informal in Jamaica (see Annex 3). Industries that are largely informal include construction (91 percent), wholesale and retail trade, repair of motor vehicles/ equipment (66 percent), transport and storage (65 percent), and accommodation and food service (48 percent) (STATIN 2022). Low productivity and informal jobs tend to be less secure. The COVID-19 pandemic resulted in a sharp rise in unemployment from 7.3 percent to 12.6 percent between January and July 2020. In addition, nearly 90,000 workers dropped out of the labor force in this period, with labor force participation rate falling from 65.6 percent to 61.3 percent. Youth unemployment increased substantially during the pandemic. Youth unemployment increased sharply from 19 percent in January 2020 to 30.3 percent in July 2020. Although unemployment rates fell below pre- pandemic levels as of July 2022, the resumption of employment has been much slower for young female workers (Figure 1.13). Male workers returned to work at a faster pace than female workers, and the gap between female and male youth unemployment widened to 12.4 percentage points in July 2021. Growth plays a significant role in poverty reduction, but the impact of redistribution has been increasing in Jamaica. The Shapely decompositions of the Datt-Ravallion (1992) approach separate observed changes in poverty into a distribution-neutral growth effect and a redistribution effect. For Jamaica during the 2007- 2013 and 2013-2019 periods, the decompositions indicate growth in mean consumption accounted for about 8 Informal employment in the nonagricultural sector includes: (i) own-account workers and employers who own informal enterprises, (ii) unpaid family members who contribute to these enterprises, and (iii) employees or employers in jobs where contributions for the National Insurance Scheme, a compulsory, contributory social security scheme, are not deducted or paid (STATIN 2022). JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 16 ASSESSMENT 60 percent of the change and redistribution accounted for about 40 percent (Figure 1.16). The redistribution component has gradually increased over the past two decades, and the poverty increase from 2019 to 2021 came almost entirely from distributional changes. Figure 1.16: Growth-distribution decomposition of poverty changes in Jamaica, 2003-2021 20 15 Change in poverty rate 41% (percentage points) 10 5 59% 112% 0 12% - 82% 63% -5 -10 18% 37% -15 2003-2007 2007-2013 2013-2019 2019-2021 Growth Distribution Source: WB staff estimates using JSLC Domestic private transfers constitute a major redistribution mechanism in Jamaica, providing substantial support to the bottom 40. Private domestic transfers eclipse public assistance programs in terms of the number of beneficiaries (Figure 1.17). In 2021, about 55 percent of the bottom 40 benefitted from domestic transfers, compared to 47 percent of the top 60 percent (Figure 1.18). Among recipients in the bottom 40, the average amount received in 2021 was equivalent to 26.7 percent of the poverty line and 25 percent of total household consumption (Figure 1.19). Figure 1.17: Population share benefitting from selected unearned income sources,9 by quintile, 2021 (% of population) 70 60 50 40 30 20 10 0 International Domestic private Public Social remittances transfers assistance security (NIS) Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Source: WB staff estimates using JSLC 9 All members of a household with a recipient are assumed to benefit. JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 17 ASSESSMENT Figure 1.18: Population share benefiting from private Figure 1.19: Average amount of international transfers, by quintile and poverty status, 2021 (% of remittances and domestic private transfers, by population) quintile and poverty status, 2021 70 120 100 60 80 50 60 40 40 20 30 0 Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Poor Non-poor Bottom 40 Top 60 Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Poor Non-poor Bottom 40 Top 60 Domestic private transfers Remittances Remittances (% of poverty line) Remittances (% of HH budget) Domestic private transfers Domestic private transfers (% of poverty line) (% of HH budget) Source: WB staff estimates using JSLC Source: WB staff estimates using JSLC Figure 1.20: Remittance inflows in Jamaica, Figure 1.21: Remittance inflows in LAC countries, Dominican Republic, Caribbean, and LAC, 1990-2021 2021 (% of GDP) (% of GDP) 30 El Salvador Jamaica Honduras 25 Haiti Guatemala Nicaragua Dominica 20 Dominican Republic St Vincent and the Grenadines % of GDP Guyana Grenada 15 Belize Suriname St Kitts and Nevis 10 Mexico Ecuador St Lucia Bolivia 5 Antigua and Barbuda Colombia Peru 0 Paraguay Trinidad and Tobago 1990 1995 2000 2005 2010 2015 2020 Costa Rica Panama Jamaica Caribbean Small States Brazil Uruguay Dominican Republic LAC (excluding high income) Argentina Chile 0 5 10 15 20 25 30 Source: WDI Source: WDI International remittances are another major source of unearned income for Jamaican households. The Jamaican diaspora exceeds 1 million, and family members abroad often send money to help relatives back in Jamaica. This has been particularly true during the COVID-19 pandemic, when remittance inflows increased more than 20 percent each year. The inflows constituted 16.2 percent of GDP in 2019 and increased to 22.2 percent in 2020 and 25.3 percent in 2021 (Figure 1.20). In the LAC region, Jamaica had the second-highest level of personal remittance receipts as a share of GDP in 2021 (Figure 1.21). The poor and bottom 40 are less likely to receive JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 18 ASSESSMENT remittances than those in higher quintiles (Figure 1.18) and tend to receive smaller amounts in absolute terms. Poor recipients and those in the bottom quintile receive an average remittance equivalent to 24 percent of the poverty line, while nonpoor recipients receive an average that is nearly half the poverty line. In relative terms, the average remittance amount for the poor comprises about 33 percent of their total household consumption, compared to 22 percent for nonpoor recipients (Figure 1.19). Both international remittances and private domestic transfers help keep vulnerable households out of poverty. The supplemental income can help meet essential needs and smooth consumption. The remittance surge during the COVID-19 pandemic in 2020 and 2021 helped mitigate the negative welfare impacts of the economic contraction. If households had not received these remittances, estimates suggest an additional 4.9 percent of the population would have fallen into poverty in 2021.10 Similarly, the poverty rate would have increased an estimated 4.3 percentage points in 2021 if domestic private transfers were subtracted from households’ consumption. These private transfers serve as a type of informal safety net for a large share of the population. The surge in remittances inflows during the COVID-19 pandemic was countercyclical, but this has not always been the case. The opposite occurred during the GFC, with remittances from the US and the UK declining in 2008, reflecting the crisis’ impact in sending countries. Overall remittance inflows as a share of Jamaican GDP declined in 2008 (Figure 1.20). A reliance on remittances to mitigate the adverse welfare impacts of future shocks should not be assumed because the extent of protection is difficult to predict and may depend on the economic circumstances in the sending countries. Risks and Challenges Ahead Although Jamaica has managed to recover fairly well from the economic impacts of the COVID-19 pandemic, the country remains highly vulnerable to external shocks because of its reliance on imported essentials and external financing. Tourism and agriculture, which account for more than a third of available jobs, are vulnerable to shocks that could undermine economic growth and poverty reduction efforts. Risks and challenges remain. The pandemic’s impacts on human capital will need to be addressed to mitigate the negative impact on future earnings potential of affected students. This will be discussed further in Chapter 3 on Human Capital. Other risks include higher inflation and risk of climate change-related disasters. High inflation poses risks to poverty reduction. Rising food and energy prices in the wake of the COVID-19 crisis and further fueled by the war in Ukraine pushed inflation up (Figures 1.22 and 1.23), undermining household purchasing power. Food inflation peaked at 14.7 percent (annual, point to point) in March 2022, increasing food security and nutritional risks to the Jamaican population, particularly the poorest. Headline inflation peaked at 11.8 percent (annual, point to point) in April 2022, significantly above the central bank’s target range of 4-6 percent. To mitigate a decoupling of inflation expectations, the bank increased the benchmark rate a total of 3 percentage points to 7 percent during 2022. As of April 2024, headline inflation fell to 5.3 percent with food inflation at 3.5 percent, providing households some relief. 10 Household income is not available in the JSLC. This analysis assumes that household consumption expenditures are equal to disposable income for households in the lower end of the distribution and a reduction in remittances or domestic transfers would translate into an equivalent reduction in consumption expenditures. JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 19 ASSESSMENT Rising food prices have increased food-insecurity concerns. The Caribbean COVID-19 Food Security and Livelihoods Impact Survey, conducted by CARICOM in February 2022, revealed that nearly half of the 930 respondents faced a disruption to their livelihoods in the two weeks prior to the survey, mainly due to increased prices of livelihood inputs. In Jamaica, 58 percent of respondents were moderately or severely food insecure, and 54 percent were not able to eat healthy and nutritious food, with low-income households being the most food insecure.11 These households were also resorting to negative coping strategies much more frequently than those with above or well-above average incomes. For example, more than twice as many respondents who classify their incomes as well below or below average have spent savings to meet food needs. Maintaining a diverse diet was not feasible for 58 percent of respondents. Jamaica’s economic history offers lessons on the detrimental impact of high inflation. Figure 1.22: Inflation, 2001-2020 Figure 1.23: Inflation, 2021-2024 16 40 14 35 Annual, point to point (%) Annual, point to point (%) 30 12 25 10 20 8 15 6 10 4 5 2 0 0 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Headline inflation Food inflation Headline inflation Food inflation Source: Bank of Jamaica; base year 2006 Source: Bank of Jamaica; base year 2019 Jamaica is also highly exposed to climate change and natural disaster risks because of its location in the Caribbean, one of the most vulnerable regions in the world. Fifteen of the top 25 countries with the most tropical cyclones per square kilometer are Caribbean islands (Sebastian et al. 2017). Jamaica is highly exposed to natural disasters, such as hurricanes, tropical storms, earthquakes, droughts, floods and landslides of varying intensity and severity.12 More than half the population resides within a mile of the shoreline, putting many settlements at risk. Furthermore, an estimated 90 percent of the country’s GDP is produced within coastal zones, exposing economic activity to more frequent and severe climate-related shocks. Between 1950 and 2017, the country faced 40 disasters, 60 percent of which were hurricanes and storms and a quarter of which were floods, droughts, and epidemics (IMF 2018). In the 1988-2012 period, 11 named storms landed in Jamaica, causing significant physical and financial damages (Word Bank 2018). According to assessments, the damages associated with Gilbert in 1988 amounted to 26 percent of GDP, compared to 3.5 percent for Charley and 5.7 percent for Ivan, both in 2004. The damages associated with Dean in 2007 were estimated at 2.6 percent of GDP. Climate change is expected to increase the frequency and severity of natural disasters in the Caribbean, including Jamaica (GOJ 2022; Ötker and Loyola 2017). In recent decades, Jamaica has experienced the impacts – 11 While the survey contributes to a better overview of impacts, the data are not nationally representative and use an online-based questionnaire that limits responses from those without connectivity. 12 World Bank (2018). Advancing disaster risk finance in Jamaica-GPSURR-LAC. JAMAICA POVERTY Trends in Poverty, Inequality, and Shared Prosperity 20 ASSESSMENT directly and indirectly – of more intense storms and hurricanes, including Categories 4 and 5 strengths, while the occurrence of floods and droughts has increased since the 2000s. A continuation will harm the essential economic assets, and a lack of economic diversification will exacerbate the negative effects of disasters on the livelihood and wellbeing of the population. In particular, climate change will likely affect agriculture and tourism, sectors of the Jamaican economy important for employing the poor and bottom 40. Reduced rainfall and severe droughts are expected to cut crop yields, damage crops and livestock, and lead to soil erosion. This will contribute to the spread of vector-borne and water-borne diseases. Marine ecosystems are threatened by increasing temperatures and rising sea levels, affecting key livelihoods and food security. Coastal ecosystems will be particularly affected with beach erosion, reduced mangroves and fish stocks, and loss of coral reefs. Frequent and severe natural disasters combined with adverse external shocks can depress economic activity and undermine macroeconomic stability. This is due to the associated short-term costs of relief, longer-term costs of reconstruction, and forgone revenue due to damaged capital and depressed economic activity (Forni et al. 2019). In short, exposure to frequent disasters can disrupt a country’s efforts to achieve high and sustainable economic growth. Jamaica’s experience illustrates this very well. For decades, public debt was above 100 percent of GDP due to persistent deficits resulting from the accumulation of contingent fiscal liabilities associated with natural disasters and adverse external shocks coupled with weak fiscal discipline (Word Bank 2017b). Shocks can adversely impact household incomes by affecting private transfers or the use of assets to generate income. Poor and vulnerable Jamaicans have a lower capacity to cope with a variety of risks, including macroeconomic crises, extreme climate-related events, health-related shocks, and crime and violence –all of which can upend the income generating capacity of households. In the asset-based framework, negative shocks have the potential to disrupt livelihoods through asset loss, disinvestment, and unemployment, and the probability of being affected by external shocks is expected to be greater among low-income households (Cord et al. 2015). These shocks have typically been more severe for Jamaicans in the bottom 40 percent of the income distribution. Strengthening Jamaica’s resilience to shocks, including climate-related events, will be essential for sustained poverty reduction. Global climate change increases the likelihood of an extreme weather event that would threaten fiscal sustainability. The extent to which natural disasters and climate change weaken a government’s fiscal position depends on the following factors: (i) the degree of exposure, (ii) the level of available protection, and (iii) the state’s liability for the damages incurred. Coping with disaster and climate change risks calls for both preventive and remedial actions. As the saying goes: “An ounce of prevention is worth a pound of cure.” Increasing spending on adaptation before disasters occur can help protect the capital stock and minimize future output and welfare losses and, in so doing, increase economic and fiscal resilience to future shocks and reduce the need for future spending (Forni et al. 2019). Furthermore, fiscal exposure can be reduced by managing risk beforehand through a combination of the following mechanisms: (1) self-insurance by building fiscal buffers or contingency funds, (2) risk-transfer arrangements such as catastrophe insurance, issuance of catastrophe bonds, or participation in regional risk-sharing arrangements, and (3) contingency financing (Ötker and Loyola 2017). POVERTY PROFILE JAMAICA POVERTY Poverty Profile 22 ASSESSMENT • Nearly half of Jamaica’s poor are concentrated in just four of the country’s 14 parishes, all located close to the capital – St. Andrew, St. Catherine, Clarendon, and Kingston. With respect to areas of residence, the majority of the poor still live in rural areas, relying mainly on agricultural for their livelihoods. • About one in five youth (ages 15-24 years) live in poverty and struggle to find jobs. On average, the unemployment rate is 2.5 times higher for youths than for the overall population13. Greater support and opportunities to realize the full potential of Jamaica’s youth will be critical for poverty reduction and sustainable growth, while helping to address challenges such as crime. • Completing secondary education substantially reduces the risk of being poor, so improving secondary school completion rates is critical. The poverty rate in 2021 was 9.0 percent for households headed by someone who completed secondary education, compared to 24.4 percent for households headed by someone with only partial secondary education. • The livelihoods of the poor and the bottom 40 are mainly in agriculture and fisheries; trade, repairs, and installation; and construction. The unemployment rate for the poor was twice as high as the non-poor in 2021. Geographical Distribution of Poverty Poverty is still predominantly rural in Jamaica. In 2021, rural poverty accounted for 58.6 percent of total poverty in Jamaica, up from 55.7 percent in 2018 (Figure 2.1). The rural contribution to poverty was higher than its population share of 44.3 percent. In rural areas, nearly 267,000 people (22.1 percent) were living below the poverty line in 2021. Among the urban population, 12.4 percent lived in poverty in 2021, with poverty rates of 10.4 percent in the GKMA and 15.5 percent in other urban areas. GKMA’s estimated 97,000 poor residents accounted for 21.3 percent of total poverty, and OUA had nearly 92,000 poor residents, accounting for 20.1 percent of total poverty. The spatial distribution of poverty is uneven, with a higher concentration in the areas closer to the capital. In terms of the geographical distribution of poverty in 2021, the rural areas in the central and eastern regions of the country accounted for 28.7 percent and 26.5 percent of overall poverty, respectively (Figure 2.2). The larger sample size in the 2018 JSLC survey allows for more disaggregated estimates at the parish level. In 2018, the parishes neighboring Kingston accounted for a large share of total poverty. Nearly half of the poor resided in just four parishes in 2018 – St. Andrew, St. Catherine, Clarendon, and Kingston (Map 2.1). The larger population size in St. Andrew and St. Catherine increased their contributions to poverty. Parishes in the north had the highest poverty rates – 20.9 percent for St. Ann and 20.3 for Trelawny (Map 2.2). 13 Based on Labor Force Survey statistics by STATIN. JAMAICA POVERTY Poverty Profile 23 ASSESSMENT Figure 2.1: Poverty rate, contribution to poverty, and Figure 2.2: Contribution to poverty, by region and population share, by area in 2018 and 2021 urban/rural (%), 2021 60 35 50 30 25 40 20 30 15 20 10 10 5 0 0 GKMA Other Rural GKMA Other Rural GKMA Other Rural Eastern Eastern Central Central Western Western urban urban urban - urban - rural - urban - rural - urban - rural Poverty rate (%) Contribution to poverty (%) Population share (%) 2018 2021 Share of poor (%) Population share (%) Source: WB staff estimates using JSLC and national poverty lines Source: WB staff estimates using JSLC and national poverty lines Note: Eastern, central, and western regions correspond to historical Cornwall, Middlesex, and Surrey counties, respectively. Map 2.1: Contribution to poverty by parish, 2018 (% of total poor) Source: WB staff estimates using JSLC (2018) and national poverty lines Map 2.2: Poverty rates by parish, 2018 (% of population) Source: WB staff estimates using JSLC (2018) and national poverty lines JAMAICA POVERTY Poverty Profile 24 ASSESSMENT Individual and Household Characteristics of the Poor Children and youth in Jamaica have higher poverty Figure 2.3: Poverty rates by age group, 2019 and rates than older age groups. In 2021, 21.1 percent of 2021 children (age 0-14) and 19.7 percent of youth (age 25% 15-24) lived below the national poverty line, up from 20% pre-pandemic (2019) levels of 13.7 percent for both 15% children and youth (Figure 2.3). The higher incidence 10% is partly explained by the larger average household 5% size among the poor. 0% 0-14 15-24 25-64 65+ Higher consumption and welfare are highly Age correlated with educational attainment. In 2021, 2019 2021 the poverty rate was 28.6 percent for those living in Source: WB staff estimates using JSLC and national poverty lines households headed by someone who had no more than a primary education. With only some secondary education, the rate was 24.4 percent. In 2021, 78 percent of the poor lived in households headed by someone who had not completed secondary education. With secondary completion, the poverty rate dropped to 9 percent (Table 2.1). Educational attainment among the poorer quintiles has improved, but inequities persist with respect to completing secondary school and higher education. Among the bottom 40, only a third of household heads completed secondary school, attended university, or HEART vocational training (Figure 2.4). However, their children have been able to attain greater education, although inequalities persist, especially for tertiary education. Disparities across quintile groups are stark, with only 8.3 percent of those ages 20-29 in the bottom quintile attending university or other tertiary education, compared to 66.2 percent for the top quintile (Figure 2.5). Figure 2.4: Educational attainment of household Figure 2.5: Educational attainment for children of heads by quintile, 2021 household heads/spouse (ages 20-29) by quintile, 2021 100 100 7.9 11.0 80 80 8.2 16.6 10.5 6.9 22.7 31.2 60 60 9.9 8.3 66.2 10.3 33.6 40 8.8 40 7.2 17.0 7.7 3.7 54.6 56.8 4.7 53.6 50.4 20 4.3 20 26.6 27.5 27.2 26.7 16.9 23.3 0 0 Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Secondary University HEART Secondary University HEART (completed) (completed) Source: WB staff estimates using JSLC (2021) Source: WB staff estimates using JSLC (2021) JAMAICA POVERTY Poverty Profile 25 ASSESSMENT Table 2.1: Poverty rate and poverty contribution by household characteristics, 2018 and 2021 Poverty Rate (% of population) Share of Total Poverty (%) 2018 2021 Difference 2021-2018 2018 2021 Jamaica 12.6 16.7 4.0 100.0 100.0 Rural 15.0 22.1 7.0 55.7 58.6 Urban 10.6 12.4 1.8 44.3 41.4 GKMA 9.2 10.4 1.2 19.9 21.3 Other Urban 12.0 15.5 3.5 24.4 20.1 Household Size 1-2 persons 5.5 6.3 0.8 10.9 9.7 3-4 persons 9.1 10.2 1.1 26.1 23.0 5-6 persons 17.7 23.3 5.6 33.1 34.0 7 or more 25.0 44.2 19.1 29.9 33.3 Sex of Head of Household Female 14.4 19.4 5.1 55.8 57.7 Male 11.0 14.0 3.0 44.2 42.3 Age of Head 16-29 years 9.9 8.2 -1.7 6.2 3.7 30-39 years 10.4 9.3 -1.1 14.4 8.2 40-49 years 13.9 14.8 0.9 24.5 21.5 50-59 years 11.6 18.9 7.2 21.6 26.5 70+ years 14.6 22.1 7.5 33.4 40.2 Marital Status of Head Married 11.9 17.2 5.3 28.9 31.1 Never married 13.6 17.3 3.7 61.4 58.6 Divorced 4.6 6.6 1.9 1.0 1.2 Separated 8.2 18.5 10.4 1.1 2.3 Widowed 12.3 13.7 1.4 7.7 6.9 Education of Head Primary or less 19.6 28.6 9.0 21.9 19.8 Some secondary 16.8 24.4 7.7 49.0 58.2 Secondary (completed) 10.7 9.0 -1.7 23.9 13.3 HEART (vocational) 2.1 8.2 6.0 1.0 4.5 University 0.8 6.2 5.4 0.8 0.4 JFLL / adult literacy 5.0 4.6 -0.5 0.1 3.8 missing 19.9 0.0 -19.9 3.3 0.0 Occupation of Head Professional, Manager, Technician 3.1 8.4 5.4 2.9 7.8 Clerk, Service/Sales Worker 7.6 9.0 1.3 11.5 8.9 Skilled Agricutural Worker 18.6 30.9 12.3 20.8 27.1 Craft/Trades Worker 7.1 7.6 0.4 8.7 7.0 Elementary Occupations 20.3 18.9 -1.4 14.9 10.1 Not working/missing 17.2 22.4 5.2 41.2 39.1 Sector of Employment of Head Primary 19.8 30.5 10.7 22.7 26.5 Industry 9.9 7.2 -2.7 9.4 5.7 Services 7.8 10.9 3.1 26.6 28.4 Not working/missing 17.3 22.7 5.4 41.3 39.3 Type of Employment of Head Government employee 6.8 3.4 -3.4 4.3 1.5 Private sector employee 9.0 10.0 1.0 20.6 18.9 Employer 4.4 9.7 5.3 0.5 1.4 Own account worker 13.4 21.0 7.6 35.8 38.9 Not working/missing 17.9 23.3 5.5 38.2 39.4 Source: WB staff estimates using JSLC 2018 and 2021 Note: See Annex 3 for all FGT poverty measures (poverty headcount, depth, and severity), standard errors, number of poor, and contributions to poverty. JAMAICA POVERTY Poverty Profile 26 ASSESSMENT Poverty rates increased with household size and the age of the household head. In 2021, poverty rates ranged from 6.3 percent for one-to-two person households to 44.2 percent for households with seven or more members. With regard to the household head’s age, poverty incidence tended to increase for older heads, ranging from 8.2 percent in 2021 for those living in households with a head aged 16-29 years to 22.1 percent for heads age 70 and older. From 2018 to 2021, the poverty rate increase was the greatest for larger households (seven or more members) and households with older heads (age 70 plus) (Table 2.1). Female-headed households had higher poverty rates than male-headed households. In 2021, the poverty rate among female-headed households was 5.4 percentage points higher than male-headed (19.4 percent vs 14.0 percent). The increase from 2018 to 2021 was also larger for female-headed households – a rise of 5.1 percentage points, compared with 3.0 for male-headed households. Given their higher employment in the tourism sector, female unemployment due to the pandemic was elevated, explaining in part the higher poverty rates. The poverty incidence among divorced or widowed household heads is lower than other populations (Table 2.1) but not statistically significant. Livelihoods and Sources of Income The livelihoods of the poor and bottom 40 are mainly in agriculture and fisheries; trade, repairs, and installation; and construction. Other sectors include government and other services, and hotels and restaurants (Figure 2.6). In 2021, over 26.5 percent of the poor derived their livelihoods in agriculture. Households with heads working in the primary sector saw the largest poverty rate increase between 2018 and 2021 – from 19.8 percent to 30.5 percent (Table 2.1). Figure 2.6: Share of total employment by industry and quintile, 2021 7 Share of total employment (%) 6 5 4 3 2 1 0 Agriculture, Trade, repairs, Construction Government & Hotels & Professional & Transport, Manufacturing forestry, fishing installation other services restaurants administrative storage & communication Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Source: WB staff estimates using JSLC (2021) Note: Only sectors with Q1 share > 0.5% are shown JAMAICA POVERTY Poverty Profile 27 ASSESSMENT Figure 2.7: Main source of livelihood, by poverty Figure 2.8: Occupation of household heads by poverty status, 2021 status, 2021 100% 100% Other 90% 90% Technicians and associate professionals 80% 80% Professionals 70% 70% Other Manager 60% 60% Pension Clerical workers 50% 50% Support from others Plant and machine operators and assemble 40% 40% Self-employed Craft and related trades workers 30% 30% Employed by others Services and sales workers 20% 20% Elementary occupations 10% 10% Skilled agricultural, forestry and fishe 0% 0% Poor Non-poor Poor Non-poor Source: WB staff estimates using JSLC (2021) Source: WB staff estimates using JSLC (2021) Although Jamaican women have higher educational attainment, gender gaps in access to economic opportunities remain wide. Unemployment rates are higher for women at all educational levels. Women also drop out of the labor force at higher rates, meaning their labor force participation is low compared to men (Figures 2.9 and 2.10). And earnings tend to be lower for women than men. These gaps appear to be explained by women’s lack of opportunities, discrimination in the labor market, and women’s role as the main caregivers for their families. For example, women are much more likely to work part-time due to household and childcare responsibilities. Men, on the other hand, are more likely to be in vulnerable and informal employment. Constraints on agency also prevent women from freely making decisions and inhibit their investments in education and health, two essentials for ensuring equal access to economic opportunities. Figure 2.9: Unemployment rates by sex and level of Figure 2.10: Population out of the labor force by sex education, 2021 and level of education, 2021 17.5 72.2 16.7 14.3 14.5 13.1 12.3 49.2 46.1 8.5 7.4 32.1 7.1 29.2 29.7 23.7 20.8 21.2 15.6 1.1 Primary Secondary Secondary HEART University Primary Secondary Secondary HEART University (incomplete) (completed) (vocational) (incomplete) (completed) (vocational) Male - unemployment rate (%) Female - unemployment rate (%) Male - out of labor force (%) Female - out of labor force (%) Source: WB staff estimates using JSLC (2021) Source: WB staff estimates using JSLC (2021) Unemployment is high among the poor and bottom 40, especially for the youth . In 2021, about 20 percent of the poor labor force were unemployed, nearly twice the non-poor labor force age 15 and older (Fig. 2.12). JAMAICA POVERTY Poverty Profile 28 ASSESSMENT The poor remained out of the labor force at a higher rate (43 percent), compared the to the nonpoor (31 percent). Among the bottom 40, the unemployment rate was 19 percent, while 33 percent remained out of the labor force (Figures 2.13 and 2.14). The unemployment rate for youth (age 15-24) in the bottom 40 is remarkably high at 40 percent, and over half of the youth are out of the labor market (estimates based on JSLC 2021)14. Inequality and inadequate job opportunities are restraining the productive potential of young people. Youth and women are more likely to be unemployed, which increases their chances of being in or falling into poverty . Youth unemployment has been on average 2.5 times higher than total unemployment. In 2021, youth unemployment was 30 percent (estimates based on JSLC). It is also more volatile, suggesting that youth are often the first in line to lose jobs during economic downturns. Adult and youth unemployment rates for females have also been persistently about twice as high as male adult and youth unemployment rates – and more volatile. Box 3: Gender Equality in Jamaica Jamaica is characterized by two distinctive and somewhat puzzling phenomena, highlighted in the recent Jamaica Gender Assessment (Word Bank 2023). A reverse gender gap exists in enrollment at all levels of education, and educational attainment is substantially higher for girls than for boys. Economic hardships, low aspirations, and meager opportunities are some of the factors explaining boys’ higher dropout rates and poorer learning outcomes. Women also tend to outperform men across various health outcomes. For instance, men face one of the highest homicide rates in the world. At the same time, the opportunities to transform investments in education and health into economic activities remain limited for Jamaican women and girls. Women experience lower labor inclusion and entrepreneurship rates, higher unemployment, and lower earnings. This gap is already evident in the transition to the labor market. The share of women not in education, employment, or training (NEET) and the unemployment rate of young women are both high vis- à-vis men. Men, on the other hand, are more likely than women to engage in vulnerable and informal jobs. Jamaican women also earn lower salaries than men in most sectors and occupations, mainly because of differences in time dedicated to paid work. Unpaid care and domestic work take an average of 18.1 percent of a typical woman’s daily time, while a man’s share averages 8.2 percent. Moreover, 45.2 percent of women report paid work as their main activity, compared to 62.7 percent of men. On average, Jamaican women earn lower salaries than men regardless of level of education, age, sector of employment or household composition – that is, the number, sex, and ages of household members. Levels of experience, educational attainment, and training tend to narrow the gender gap in earnings, whereas differences in the sector of occupation widen it. Nonetheless, the earnings gender gap not only disappears, but reverses once the analysis accounts for the number of hours worked. This indicates that the differences observed in earnings are partly explained by women’s inability to dedicate more time to paid work 14 Note that JSLC based estimates differ from LFS-based estimates due to different questions in the surveys. JAMAICA POVERTY Poverty Profile 29 ASSESSMENT Box 3: Gender Equality in Jamaica When it comes to women’s agency, the country has improved in many respects, but concerns remain about female representation in decision-making structures as well as gender-based violence. Jamaica’s legal and institutional frameworks promote gender equality in many areas, including ensuring women’s access to justice and property. However, the implementation of such regulations remains a challenge due the lack of institutional coordination as well as budgetary and human resources constraints that persist across sectors. Additional efforts are required to reduce barriers to work for women and ensure equal pay for equal work, guarantee equal access to credit, and prevent and penalize sexual harassment at work. Beyond the legislative framework, gender norms about the role of women and men in society remain mixed and pose barriers to economic participation. For example, 70 percent of Jamaicans believe that women should take care of the house and family. One in every four Jamaican women has experienced physical violence from a male partner and nearly half have experienced controlling behaviors. The effects of climate change could deepen existing gender inequalities. Jamaican women play an important role in agricultural production, one of the most vulnerable sectors to natural hazards and environmental degradation. Droughts and water shortages put additional pressure on women and girls, who are traditionally responsible for water collection for domestic use. In addition, women in rural areas have more limited access to formal work, land, and finance, which makes their livelihoods more insecure in the event of a weather shock. Natural disasters also increase the risks of diseases, illnesses, and injuries, which fall disproportionately on women, given their role as caregivers. Source: WBG (2023). Jamaica Gender Assessment Figure 2.11: Unemployment rates among household Figure 2.12: Unemployment rates for population age heads age 15+, by poverty status and quintile, 2021 15+, by poverty status and quintile, 2021 19.8 19.0 18.4 10.6 10.9 11.2 10.5 8.5 8.7 5.0 4.8 3.9 4.2 3.4 Poor Non-poor Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Poor Non-poor Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Unemployment rate (%) Unemployment rate (%) Source: WB staff estimates using JSLC (2021) Source: WB staff estimates using JSLC (2021) JAMAICA POVERTY Poverty Profile 30 ASSESSMENT Figure 2.13: Unemployment rates (age 15-65) by Figure 2.14: Population out of the labor force (age poverty status and quintile, 2021 15-65), by poverty status and quintile, 2021 20.4 39.3 19.6 19.3 37.3 29.2 25.9 24.6 23.6 10.8 11.2 19.3 8.8 4.3 Poor Non-poor Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Poor Non-poor Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Unemployment rate (%) Out of labor force (%) Source: WB staff estimates using JSLC (2021) Source: WB staff estimates using JSLC (2021) Non-Monetary Poverty Life expectancy for Jamaicans decreased slightly over the past two decades, while substantial declines in fertility were seen . While peer countries have seen an average increase in life expectancy of 1.8 years (Figure 2.15), life expectancy for Jamaicans declined nearly five months over the past two decades (70.9 in 2000 to 70.5 in 2021). At 72 years, life expectancy for women remained unchanged between 2000 and 2021. In contrast, it decreased slightly for men (69.1 in 2000 to 68.5 in 2021). This pattern reflects two trends in men’s health. First, their health outcomes did not improve at the same pace of women’s – or men’s in other countries. Second, high rates of male homicides and chronic diseases have deteriorated men’s health outcomes. At the same time, Jamaica’s total fertility rate dropped from 2.58 births per 1,000 women in 2000 to below replacement rates (1.98) in 2018. However, Jamaica is among the Caribbean countries with the highest rates of adolescent pregnancies, a situation exacerbated by the prevalence of early cohabitation. Jamaica has made significant progress in educational attainment and access to education, especially at the primary level, but major gaps remain. The effects of poverty, shortcomings in the educational system, and exposure to crime lead to poor school performance, particularly among boys (WBG 2023). On average, Jamaican children complete 11.4 years of schooling by age 18, but those years are equivalent to only 7.1 years of learning (see Chapter 3). This learning gap disproportionately impacts children in the bottom quintiles, who are more likely to drop out of school for economic reasons. At the secondary-school level, progression is low and unequal. A small fraction of Jamaican students enrolls in tertiary education, and the probability of doing so is significantly lower for young men. Access to electricity has improved significantly in Jamaica and is nearly universal (Figure 2.16). Almost all households use electricity from the grid as a source of lighting (98 percent of the non-poor vs. 93 percent of the poor in 2018). Nonetheless, 3.6 percent of the poor use kerosene or other sources of lighting, compared to 1.2 percent of the non-poor. Only 2.8 percent of the poor do not have electricity. Dwellings’ source of lighting differs across regions, with 99.5 percent of GKMA households using electricity from the grid, compared to 95.6 percent of rural households. In rural areas, 2.6 percent of the households use kerosene or other sources of lighting and 1.7 percent do not have electricity (compared to 0.2 percent and 0.1 percent in GKMA). Rural households also experience many more power outages, with an average of 2.6 per month, compared to 1.1 in GKMA and 2.3 in OUC. JAMAICA POVERTY Poverty Profile 31 ASSESSMENT Jamaica has had mixed progress in improving access to water and sanitation . Nine in 10 people in Jamaica have access to safe drinking water, with access declining slightly from 93 percent of the population in 2000 to 91 percent in 2020 (Figure 2.17, based on WDI). Access to sanitation increased from 83 in 2000 to 87 percent in 2020 (Figure 2.18). The government’s JSLC reports show a lower percentage for improved drinking water sources considered safe for drinking (72 percent) because private, trucked water sources are excluded (Table 2.2). While they may be safe, the quality could not be certified, resulting in exclusion from the government definition of safe drinking water. This should be considered a lower-bound estimate. Rural areas have lower access to piped water and other safe drinking water sources. As for sanitation, 97 percent of the population reported access to toilets or pit latrines in the 2021 JSLC. The poor in GKMA have slightly lower access to safe sanitation, compared to OUC and rural areas. Figure 2.15: Life expectancy at birth (years), 2000 Figure 2.16: Access to electricity (% of population), and 2021 2000 and 2020 Barbados Barbados Costa Rica Georgia Upper Middle Income Dominican Republic Mauritius Dominican Republic Jamaica LAC Fiji Georgia Costa Rica World Mauritius Caribbean Small States Jamaica Caribbean Small States Fiji LAC 60 65 70 75 80 70 80 90 100 2000 2021 2000 2020 Source: WDI Source: WDI Figure 2.17: Access to at least basic drinking water Figure 2.18: Using at least basic sanitation services services (% of population), 2000 and 2020 (% of population), 2000 and 2020 Mauritius Fiji Costa Rica Barbados Barbados Costa Rica Georgia Upper Middle Income LAC Caribbean Small States Dominican Republic LAC Upper Middle Income Dominican Republic Caribbean Small States Jamaica Fiji Georgia Jamaica 60 70 80 90 100 60 70 80 90 100 2000 2020 2000 2020 Source: WDI Source: WDI JAMAICA POVERTY Poverty Profile 32 ASSESSMENT Table 2.2: Access to electricity, drinking water, and sanitation by poverty status, quintile, and area, 2021 Electricity, source for lighting Safe drinking water Sanitation (% of population) (% of population) (% of population) Poverty status Non-poor 96.4 75.5 98.2 Poor 84.2 58.6 91.2 Quintile Q1 (poorest) 85.5 59.2 91.3 Q2 96.1 65.8 98.4 Q3 96.2 74.7 98.0 Q4 95.8 77.6 98.6 Q5 (richest) 98.1 86.8 99.1 Area GKMA 94.7 94.6 95.8 OUC 95.2 88.5 98.4 Rural 93.5 50.6 97.2 Jamaica 94.2 72.6 97.0 Source: WB staff estimates using JSLC (2021) HUMAN CAPITAL JAMAICA POVERTY Human Capital 34 ASSESSMENT • Human capital development through education and health promotes equality of opportunity and protection in the market and employment transition, which are crucial for inclusive economic growth. When delivered well, education and health increase productivity and promote employment, earnings, and poverty reduction (Commission on Growth and Development, 2008). • This chapter assesses the state of human capital in Jamaica as measured by education and health indicators. The analysis describes the achievements and variations across socioeconomic groups; compares Jamaica with regional, structural, and aspirational peers;15 and distinguishes individual and systemic constraints on human capital accumulation.16 • Jamaican children complete on average 11.4 years of schooling by age 18, but those years are equivalent to only 7.1 years of learning-adjusted years of education (LAYS).17 This learning gap disproportionately impacts poor children. Among boys, lack of interest, violence, and poverty lead to poor education outcomes; for girls, it is teenage pregnancy. • The low quality of public health care is a challenge that disproportionately affects the poor in Jamaica. Long waiting times and costs are the main issues when visiting health facilities, and these obstacles tend to be more acute for people at the bottom of the income distribution. The prevalence of non-communicable diseases, particularly cardiovascular disease and diabetes, are rapidly increasing among the Jamaican population and imposing large economic burdens on households. Current Stock and Quality of Human Capital The Human Capital Index (HCI), first introduced by the World Bank in 2018, quantifies the contribution of health and education to the productivity of the next generation of workers. HCI scores reflect the expected productivity of a child born today relative to what her productivity could have been had she enjoyed a complete education and full health. The HCI is constructed around five measures linked to productivity: child survival, school enrollment, quality of learning, healthy growth, and adult survival. The indicators applied to measure performance include the mortality rate of children under 5 years of age, the number of years of school attendance by age 18, harmonized test scores, the share of children aged 15 who survive to age 60, and the rate of stunting for children under 5 years of age. The index ranges between 0 and 1, with a score of 1 indicating a child born today can expect to achieve full health (defined as no stunting and survival up to at least age 60) and achieve her formal education potential (defined as 14 years of high-quality school by age 18) (WBG 2018). 15 The selection of peers is based on the Jamaica SCD. Structural Peers meet the following criteria: (i) population of up to 15 million people, (ii) upper middle-income country, (iii) international tourism receipts as a percentage of total exports greater than 30 percent, (iv) agriculture employment as a percent of total employment greater than or equal to 15 percent, (v) Country Policy and Institutional Assessment (CPIA) score greater than or equal to 3.30. Aspirational Peers meet these criteria (i) – (iii) above in addition to (iv) general government gross debt of less than 80 percent of nominal GDP and (v) CPIA score greater than 3.60 (1=low; 6=high). 16 The chapter also presents information on equity and efficiency, while a detailed analysis on the distributional aspects of health, education, and social protection spending is presented in Chapter 4. 17 LAYS is a measure developed by the World Bank that combines quantity and quality of schooling into a single metric. It calculates the number of years of schooling a child can expect to obtain by age 18, adjusted for the quality of learning. The adjustment is based on country-specific data from international student achievement tests. LAYS are calculated as the product of Expected Years of School, which measures the number of years of school a child can expect to attain by age 18 given enrollment patterns, and Harmonized Learning Outcomes, which uses data from international student achievement tests to benchmark what children learn in school across countries (Filmer et al., 2018). JAMAICA POVERTY Human Capital 35 ASSESSMENT In 2020, Jamaica was ranked 97th among 174 countries with an HCI score of 0.53. This indicates that the future earnings potential of a typical child born in Jamaica today will be 53 percent of what it could have been with a complete education and full health. Human capital losses also affect economic growth, and anything that erodes human capital could result in lower growth rates for years to come. Jamaica’s HCI is higher than regional peer Dominican Republic and structural peer Fiji; it is below aspirational peers Costa Rica and Mauritius (Table 3.1). Jamaica compares favorably to all peers in the probability of survival to age 5. However, educational performance remains low, driving down Jamaica’s HCI. The country’s average test scores are 387 (third lowest score compared to peers) and lower on average for boys than for girls (372 vs. 404). The scores translate into low learning-adjusted years of schooling. Jamaican children are expected to attend school for 11.4 years, but the HCI data imply the number of effective years of schooling is only 7.1 years in terms of what they learn (6.7 for boys and 7.5 for girls). This matters because learning losses can affect students’ earnings trajectory over their lifetimes and their chances of escaping poverty. Table 3.1: HCI and its components in Jamaica and benchmark countries, 2020   Regional Structural Aspirational Jamaica Dominican Indicator Fiji Georgia Costa Rica Mauritius Republic Component 1: Survival             Probability of survival to age 5 0.97 0.97 0.99 0.99 0.98 0.99 Component 2: Schooling             Expected years of school 11.9 11.3 12.9 13.1 12.4 11.4 Harmonized test scores 345 383 400 429 473 387 Learning-adjusted years of school 6.6 7.0 8.3 9.0 9.4 7.1 Component 3: Health             Share of children <5 not stunted 0.93 0.91 - - - 0.94 Survival rate (age 15 to 60) 0.85 0.78 0.85 0.92 0.86 0.86 Human Capital Index (HCI) 0.50 0.51 0.57 0.63 0.62 0.53 Source: WBG (2020). Human Capital Project. See https://www.worldbank.org/en/publication/human-capital Note: Barbados is also considered a regional peer, but HCI data are not available. The rest of this chapter presents the distributional analysis of human capital, often the only asset poor people have, as measured by educational, health, and nutritional outcomes. Data permitting, the analysis focuses on differences in these outcomes according to poverty status, consumption quintile, location, and gender. System- level variables with regard to efficiency and equity are considered in evaluating the performance of the education and health sectors in Jamaica, building on recent Public Expenditure Reviews (PER) for both sectors and further developed in Chapter 4 on the distributional effects of Jamaica’s fiscal system. JAMAICA POVERTY Human Capital 36 ASSESSMENT Health and Nutritional Outcomes Maternal mortality remains high in Jamaica. The maternal mortality rate has remained stagnant since 2000 and, at 80 deaths per 100,000 live births in 2017, is slightly higher than the LAC average and above most regional, structural, and aspirational peers – except for the Dominican Republic (95 deaths). Young adolescents in Jamaica face a higher risk of pregnancy-related complications and deaths than older women (McCaw-Binns et al. 2018; McGowan et al. 2018; Kanguru et al. 2017; WBG 2017). The prevalence of adolescent pregnancy, particularly in rural areas, is likely a major contributor to maternal mortality rates, because young women face an elevated risk of complications during pregnancy and delivery. While most women receive prenatal care (98 percent in 2017 and on par with the LAC average) and all births are attended by a skilled professional, the quality of services has been identified as a central challenge (UNFPA 2017). According to the Ministry of Health and Wellness, preeclampsia and postpartum hemorrhaging are the leading cause of illness and death among pregnant women in Jamaica. In 2020, 3.5 percent of the 31,710 deliveries experienced preeclampsia and 5.4 percent experienced postpartum hemorrhaging. The low quality of maternal care and the high rates of hypertension and diabetes that put women at risk of complications partly explain these patterns. Large disparities exist in access to health facilities and maternity centers across consumption quintiles. Waiting times in public health facilities or maternity centers, mostly used by the poorest, are higher than those in private facilities that serve the richest. In 2018, a patient waited an average of 4.5 hours in a public health facility before being seen by medical staff, compared to 2.0 hours for a patient visiting a private health center. Weak surveillance and monitoring and a shortage of midwives and nurses – to some extent linked to migration of the workforce – have also been identified as drivers of maternal mortality and, more generally, the low quality of health services. Other factors include delays in seeking appropriate medical help due to out-of-pocket expenses, poor education, or information and difficulty in reaching facilities due to distance or poor infrastructure. Although user fees in public health facilities have been removed, affordability is one of the main reasons people in the lowest quintile cite (17 percent) for not to seeking care when needed (compared to 1.8 percent among the richest). Jamaica has seen sustained reductions in child mortality, but it is one of five economies (with data) where adult survival has declined in recent decades. The country performs relatively well on infant and under-5 mortality, although slightly below some of its peers, such as Barbados, Georgia, and Costa Rica. Between 2010 and 2021, Jamaica saw the largest decline (-0.6 percentage point) among the five countries (out of 169 with data) where adult survival decreased.18 The reduction was driven by a decline in survival rates for adult men (-1.4 percentage points, compared to a 0.15 increase for women) and it was accompanied by a large increase in adult mortality, particularly among men and compared to peers (Figure 3.1). In Jamaica, adult male mortality increased 45.2 percent and female mortality rose 30.4 percent. Over the same period, rates decreased 9.4 percent for males and 14.3 percent for females in Barbados; in Fiji they fell 1.4 percent for men and 19.7 percent for women. According to PAHO (2022), the main causes of adult deaths in Jamaica are cardiovascular diseases, diabetes, and cancer (42 percent of adult deaths). Homicide is another leading cause of premature death, especially among men.19 18 Patterns are consistent when comparing pre-pandemic data (2010 and 2019) and consistent with the results in the World Bank report Human Capital Index 2020 Update: Human Capital in the Time of COVID-19 (2021). 19 Jamaica Country Profile. https://hia.paho.org/en/countries-22/jamaica-country-profile. JAMAICA POVERTY Human Capital 37 ASSESSMENT Adult mortality has strong negative effects on household welfare and vice versa. Evidence shows an increased risk of remaining or becoming poor following an NCD death in the household. The pathway from an NCD health shock, including death, to household welfare results from either direct and/or indirect costs of the illness or the longer-term impact of coping strategies (Thanh et al. 2006; Mirelman et al. 2016). In addition, there is a strong relationship between poverty and NCD risk. A systematic review of evidence of 283 studies in low- and middle- income countries in Africa, Asia, and Latin America between 1968 and 2017 found that since 2000 (but not before), populations with lower socioeconomic status are at an elevated risk of developing NCDs and they are also at a higher risk of death because of lack of health care and disease prevention (Niessen et al. 2018). Figure 3.1: Change in adult mortality rates (%), 2010-2021 Jamaica LAC Costa Rica Georgia Dominican Republic Mauritius Barbados Fiji -20 -10 0 10 20 30 40 Male Female Source: United Nations Population Division’s World Population Prospects Vaccination expansion has substantially reduced childhood mortality, but coverage varies widely at the regional level. Jamaica’s immunization rates for children ages 12-23 months are close to or above those of aspirational peers, such as Costa Rica and Mauritius, but the coverage rate for the six vaccines given to children below age 5 falls below the national target of 95 percent. In 2018, the average coverage was 88 percent for polio; tuberculosis; mumps, measles, and rubella (MMR); diphtheria, pertussis and tetanus (DPT); hepatitis B and Haemophilus B (HiB). On average, coverage rates were 91.2 percent in rural areas and 90 percent in OUC for all six vaccines, compared to 81 percent in GKMA. The difference was driven by the coverage of specific vaccines, particularly for those that require multiple doses. For example, there was universal coverage against tuberculosis in all regions, but only 74 percent of children below age 5 were vaccinated against polio and DPT in GKMA. After decades of progress in childhood immunization, and in line with global trends, vaccination coverage in Jamaica declined during the COVID-19 pandemic. According to the WHO and UNICEF, pandemic disruptions interrupted childhood vaccination almost everywhere, setting back vaccination rates to levels not seen since the 2000s. Similarly, data collected before and during the COVID-19 pandemic show declines in the perception of the importance of vaccines for children in many countries for which data are available. In Jamaica, the percentage of Jamaican children fully vaccinated against DPT fell from 96 percent to 90 percent between 2019 and 2021 but increased to 98 percent in 2022. However, measles vaccine coverage declined from 94 percent in 2019 to 91 percent in 2022 (Figure 3.2). Although there is no specific data for Jamaica, it is estimated that existing disparities JAMAICA POVERTY Human Capital 38 ASSESSMENT also widened with the pandemic. On average, over one in five children are zero-dose in the poorest households, compared to just one in 20 in the wealthiest (UNICEF 2023). Figure 3.2: Immunization, measles (% of children ages 12-23 months) 100 % children ages 12 - 23 months 80 60 40 20 0 Jamaica Barbados Costa Rica Fiji Mauritius Dominican Republic 1990 2019 2022 Source: WHO and UNICEF (http://www.who.int/immunization/monitoring_surveillance/en/) Jamaica has made impressive improvements in child nutrition, but large geographic, gender, and socioeconomic gaps persist. The expansion of the primary health care system, improved access to child nutrition clinics, the adoption of food subsidies and stamps, and the Programme of Advancement Through Health and Education (PATH), along with food aid from international agencies, played a key role in reducing child malnutrition in Jamaica (Altink 2020). In 2018, approximately 3.4 percent of children ages 5 and below were classified as undernourished and 3.3 percent were classified as wasted (PIOJ, 2021) – slightly higher than the rates in aspirational peer Costa Rica (2.9 percent for undernourished and 1.8 percent for wasted). On the other hand, at 4.1 percent for stunting and 5.9 percent for overweight, the prevalence of these conditions among children in the same age group is the lowest among regional, structural, and aspirational peers with data – except for overweight in Fiji. In 2018, the GKMA and rural areas recorded the largest proportions (2.9 percent each) of children 0−59 months who were underweight, and the GKMA also showed the largest share of children who were wasted (6.6 percent). When it comes to gender differences, boys (6.0 percent) are more likely to have low height for their age than girls (1.9 percent). Among children with low weight for their age, the prevalence is substantially higher among boys, recording a 3.7 percentage point difference relative to girls (PIOJ 2021). The double burden of malnutrition20 is more common among children in low socioeconomic status and in rural areas. In 2018, 8.4 percent of children under age 5 in the bottom quintile were stunted, compared to 1.2 percent in the top quintile. Similarly, overweight prevalence was 6.6 percent among children ages 5 years and below in the lowest consumption group, but only 2 percent among those in the highest consumption group. Rural areas registered the largest proportion of children who were stunted (4.5 percent), but also the second largest share of overweight children (6.4 percent). The double burden of malnutrition in Jamaica is partly explained by the heavy reliance on external markets and the vulnerability to external shocks (and fluctuating food prices) that can affect the nutritional status of the population, particularly of the poorest households (Cory et al. 2014). Child malnutrition is a concern because undernourished children can suffer physical or developmental delays in growth, with long-term effects on cognitive functioning and productivity. Obese children are prone to developing 20 Coexistence of undernutrition along with overweight and obesity. JAMAICA POVERTY Human Capital 39 ASSESSMENT NCDs later in life (already an issue among Jamaica’s adult population), which places a burden on the health system (Altink 2020). Rising food and energy prices pose risks to Jamaicans’ nutritional status, particularly the poorest. The Caribbean COVID-19 Food Security and Livelihoods Impact Survey, conducted by the Caribbean Community (CARICOM) in February 2022, revealed that nearly half of the 930 respondents faced a disruption to their livelihoods in the two weeks prior to the survey, mainly due to the increased prices of livelihood inputs. In Jamaica, 58 percent of respondents were moderately or severely food insecure, and 54 percent were not able to eat healthy and nutritious food, with low-income households being the most food insecure and resorting to negative coping strategies much more frequently than others. For example, more than twice as many respondents who classify their incomes as well below or below average have spent savings to meet food needs, compared to those with above or well above average incomes. The Shifting Burden of Disease Health perceptions are good among Jamaicans and differences by gender and poverty status are small. In 2018, nearly 85 percent of the population perceived their health as good or very good, and this perception was only slightly higher among men compared with women (86.3 percent for men vs. 81.3 percent for women). Differences based on poverty status were also small. Eight of 10 people living in poor households felt their health was good or very good, compared to 84 percent among the non-poor. In contrast, 4 percent of individuals reported their perception of health as poor and 3 percent as very poor. Across areas, the proportion of respondents perceived to be in good to very good health was the highest (86 percent) in GKMA and the lowest (82.5 percent) in rural areas. Despite similarities in health perceptions, data show that lifestyle-related chronic diseases are reported slightly more often by the richest. In 2021, the share of people who report having been diagnosed with one or more chronic diseases ranged from 24.6 percent in the first quintile to 31.6 percent in the top quintile. Differences by poverty status were small, with 23.6 percent of the poor and 27.4 percent of the non-poor reporting at least one chronic disease. The most common disease among both groups was hypertension (13.3 percent and 15.3 percent, respectively), followed by asthma (5.6 percent and 8.0 percent) and diabetes (5.1 percent and 6.1 percent). Such small difference may reflect the fact that the poor are less likely to get a diagnosis and appropriate treatment (Das et al. 2012). The incidence of chronic diseases has increased in recent years, rising sharply with age, with widening differences between the poor and non-poor. Between 2018 and 2021, the share of poor people aged 60 and above who suffered from chronic diseases increased from 55 percent to 70 percent for the poor and from 58.5 percent to 65.8 percent for the non-poor. Nonetheless, the data on health perceptions and reported diseases should be interpreted with caution. Evidence suggests that poorer people may be less likely to consider themselves sick relative to wealthier people, either because they are accustomed to minor illness or have higher opportunity costs of being sick. They will not consider themselves ill and seek medical help unless they are too sick to work (Das et al. 2012). Women tend to report higher proportions of chronic diseases than men, but the opposite is true for communicable diseases. According to the WHO, circulatory system diseases are the most prevalent (25 percent), with similar male and female prevalence of hypertension (WHO 2018). Nevertheless, gender gaps widen with age. JAMAICA POVERTY Human Capital 40 ASSESSMENT More than 40 percent of men aged 60+ reported hypertension in 2021, compared to 62.3 percent of women in the same age group. The prevalence of diabetes is also higher among adult women (9.3 percent) than men (6.4 percent). While chronic diseases are more common among women, men are more likely to die from cardiovascular disease, cancer, diabetes, or chronic respiratory diseases. They are also at a higher risk of some communicable diseases, such as HIV/AIDS that particularly affects young Jamaican men. These gender differences are partly driven by health-related behaviors. Unhealthy diets and physical inactivity are more common among women, whereas men are more prone to engaging in risky behaviors, such as smoking or alcohol consumption. Differences may also be explained by the fact that women are more likely than men to seek help when sick (or to see a doctor for routine checkups); hence, they are more likely to get a diagnosis and report it. Consistent with global evidence, tobacco use – a risk factor for cardiovascular diseases and premature death – is more prevalent among Jamaicans with low socioeconomic status. In 2018, approximately 17 percent of Jamaicans 14 years and older reported being smokers (PIOJ 2021).21 The highest proportion of smokers is observed among individuals in the first quintile (19.7 percent), and the lowest share of smokers in the top quintile (13.9 percent). A systematic review of evidence reveals that tobacco also creates economic costs that extend beyond the direct cost of illnesses and productivity losses, including health care expenditures from active and passive smokers, employee absenteeism, reduced labor productivity, and widespread environmental damage (WHO 2014). In the Caribbean, Jamaica has the second highest prevalence of tobacco use (PAHO, 2018), and some studies report that smokers spend 40 percent to 49 percent of their annual income on treating tobacco-related chronic illnesses (Crawford et al. 2012). Gender differences in smoking behaviors are also sizable. Among men ages 14 and above, 28.1 percent reported being smokers, compared with 6.1 percent of women. Jamaica’s high rates of crime and violence – particularly among men – are partly attributed to limited economic opportunities and have country-wide effects. Jamaica is among the countries with the highest rates of intentional male homicides in the region (102.5 per 100,000 males in 2017) – second after El Salvador (115.9). Nine of 10 homicides affect men and are related to gangs (WBG 2015). Evidence suggests that income inequality, limited economic opportunities, high rates of youth unemployment, and low educational achievement are risk factors or determinants of Jamaica’s homicide rate (Francis et al. 2009). The high level of crime has economy-wide costs and strongly affects business development (Ruprah and Sierra 2016). Estimates indicate that crime-related costs represent almost 3 percent of Jamaica’s GDP. An average of 84 percent of Caribbean businesses reported that crime was an obstacle to doing business, not only because of direct losses but also due to the cost of security measures (Sutton and Ruprah 2017). As in other countries, Jamaican men have suffered higher mortality rates as a result of COVID-19 and women reported facing more mental health issues. In Jamaica, 2.8 percent of infected men died, compared to 1.8 percent of women. For every 15 deaths in confirmed cases among men, there are 10 among women. However, the number of confirmed cases has been higher among women (Figure 3.3) (Global Health 50/50). Both physiological and behavioral factors, including comorbidities and risky behaviors, and gender differences in immune response appear to explain the gender gap in mortality. Notwithstanding, women generally reported suffering more than men from mental health issues during the pandemic. According to HFPS data, 20 percent of women and 21 Needs assessment for implementation of the WHO Framework Convention on Tobacco Control in Jamaica, Convention Secretariat 2015. https://moh.gov.jm/wp-content/uploads/2016/07/Jamaica-needs-assessment-report_Jan26.2015.FINAL-VERSION.pdf. JAMAICA POVERTY Human Capital 41 ASSESSMENT 14 percent of men reported difficulties sleeping during the pandemic, 29 percent of women and 22 percent of men experienced anxiety, and 22 percent of women and 12 percent of men reported more aggressive behavior. Figure 3.3: Share of COVID-19 confirmed cases and deaths by sex Confirmed cases Deaths 70% 60% 60% 55% 50% 50% 45% 40% 40% 30% 21/07/20 21/08/20 21/09/20 21/10/20 21/11/20 21/12/20 21/01/21 21/02/21 21/03/21 21/04/21 21/05/21 21/06/21 21/07/21 21/08/21 21/09/21 21/10/21 21/11/21 21/12/21 21/01/22 21/02/22 21/07/20 21/08/20 21/09/20 21/10/20 21/11/20 21/12/20 21/01/21 21/02/21 21/03/21 21/04/21 21/05/21 21/06/21 21/07/21 21/08/21 21/09/21 21/10/21 21/11/21 21/12/21 21/01/22 21/02/22 Male Female Male Female Source: Global Health 50/50 Disability rates do not vary by socioeconomic status but tend to be more prevalent in specific regions. Disability is a development priority because it can reinforce and perpetuate poverty. Location, the disability’s severity, and an individual’s ease of movement have significant impacts on the ability to access basic services and opportunities. In 2021, 17 percent of the Jamaican population ages 5 and above reported a disability, with no difference according to socioeconomic status. The most common types of disabilities were sight (9.8 percent) and walking impairment (7.8 percent). Disabilities are more frequently reported among people living in rural areas (19.6 percent), compared to people in GKMA (13.9 percent) and OUC (16.6 percent). It is also important to note that specific NCDs have become a major cause of disability in the country. In 2019, diabetes ranked not only as the top cause of death and disability in Jamaica, but also as the cause that increased the most during the 2010-19 period (GBD 2019).22 According to the Ministry of Health and Wellness, 80 percent of amputations in the country are related to diabetes.23 Equity in Access to Health Care In 2021, less than 5 percent of Jamaicans reported being ill or suffering injuries in the past month, but many of them did not seek care mainly due to affordability.24 Despite being ill or injured, more than one-third of Jamaicans did not seek medical help. While these figures should be interpreted cautiously because of sample sizes, they may reflect the low quality of public health services, specific barriers to access primary care, unavailability of medical supplies, and high opportunity costs. Although public health services are free, another one of the main reasons for not seeking medical help, as reported in the JSLC, is affordability. For instance, public transportation use parallels reports of health care unaffordability, partly because it is a proxy for low socioeconomic status and partly because the direct effects of transportation access and costs. In Jamaica, the lack of access to transportation 22 Data available at https://www.healthdata.org/research-analysis/health-by-location/profiles/jamaica. 23 https://www.moh.gov.jm/mou-signed-for-new-limb-new-life-prosthetic-partnership-to-support-jamaicans-with-disabilities/#:~:text= In%20Jamaica%2C%20an%20estimated%2080,are%20unaware%20of%20their%20status. 24 Data are not reported by quintile or poverty status because of small sample size. JAMAICA POVERTY Human Capital 42 ASSESSMENT is a barrier to accessing primary care for elderly persons with chronic diseases (Gordon-Strachan et al. 2010). Global research suggests that the high opportunity and financial costs of seeing a health provider can force low-income patients to make tough choices between their health and the financial well-being. Poor patients often give precedence to food or housing before taking care of their health; thus, differences in the prevalence of chronic diseases may be partly explained by the fact that poor patients are less likely than non-poor patients to get a diagnosis and appropriate treatment (Das et al. 2012). The quality of public health care is a major challenge in Jamaica. The main issues when visiting health facilities are long waiting times and costs, which tend to be a greater burden for the poor. Non-poor individuals who reported illnesses or injuries are 8 percentage points more likely to acquire medications and, when they do so, the medicines are acquired through private facilities. In 2021, 20 percent of poor individuals who reported illnesses or injuries purchased medicines at public facilities, compared to 12.5 percent of their non-poor counterparts. In 2018, purchases at public facilities were 22 percent for the poor and 17.3 percent for the non- poor. In contrast, 39.1 percent of the poor acquired medications in private facilities, compared to 59.5 percent of the non-poor. This represents large declines from 2018, when 64 percent of the poor and 81.7 percent of the non-poor reported buying medicines from private providers. Jamaica abolished user fees in the public health sector in 2008, but out-of-pocket spending, poor quality, and persistent access inequalities represent barriers to universal coverage. The 1997 National Health Services Act (amended in 2016) exempts patients using public health facilities from fees for all treatments, including surgery, imaging and laboratory investigations, and medications. Exceptions include medical reports, highly specialized tests, and full medical screens. Jamaica’s health system consists of public facilities that offer free services, and private facilities that charge fees. At the same time, the National Health Fund (NHF) covers the cost of medications on a subsidized list in public pharmacies and part of the cost in some private pharmacies. Nonetheless, there is evidence suggesting that out-of-pocket spending represents a barrier to achieving universal health coverage, alongside the dimensions of quality and equity in access to all services (Ramsay et al. 2021). Poor Jamaicans are four times less likely than the non-poor to have health insurance and spend a larger share of their consumption on medicines. In 2021, less than one-fourth of Jamaica’s population had any type of health insurance.25 The bottom quintile of the consumption Figure 3.4: Coverage of health insurance by quintile, distribution contains the lowest share of insured 2018 and 2021 people (6.6 percent), and the top quintile the highest 60% share (49.0 percent) (Figure 3.4). These differences are relevant, considering that health insurance provides 40% financial protection for individuals incurring high 20% medical costs by reducing out-of-pocket spending. In 2018, for example, average monthly expenditures 0% Q1 (poorest) Q2 Q3 Q4 Q5 (richest) on medicines in the richest quintile (JMD 4,498) 2018 2021 was more than double that of people in the bottom Source: WB staff estimates using JSLC 2021 and 2018 quintile (JMD 2,034). However, it has been estimated that the rich spend 3.9 percent of their consumption 25 The JSLC asks respondents whether they have any type of insurance and differentiate between private, NI Gold for retirees who were National Insurance Scheme contributors, or other. JAMAICA POVERTY Human Capital 43 ASSESSMENT expenditures on medicines from private sources when ill, compared to 21 percent among the poor (WBG 2017). Health insurance coverage is higher in GKMA (28.5 percent) than in rural areas (14.3 percent), and a larger portion of women (20.2 percent) than men (16.5 percent) report having health insurance. Equity in Access to Education Jamaica has achieved universal attendance for the school-age population but not all students attend the intended grade for their age. In 2018, the attendance rate at formal educational institutions was nearly 100 percent up to the age of 15; it then shows a steep decline for the upper-secondary and tertiary-age populations. Moreover, not all students attend the intended level of education for their age. For example, the net attendance rate is about 83 percent in pre-primary and 88 percent in primary education, but only 69 percent in lower secondary education and 56 percent in upper secondary education, which implies many students attend below their expected grade levels based on age. Despite improvements, disparities in attendance persist based on socioeconomic level, sex, and location — particularly in secondary and tertiary education. Students in the bottom consumption quintile and young men are less likely to attend secondary and tertiary education (Table 3.2). Net attendance rates in 2021 were 73 percent for the bottom quintile and 83 percent for top quintile. In rural areas, net attendance rates in pre-primary, primary, and tertiary education were lower than in GKMA and OUC, but nearly the same for secondary. Table 3.2: Net attendance rates by level of education, 2010 and 2018 Pre-primary education Primary education Secondary education Tertiary education   2010 2018 2010 2018 2010 2018 2010 2018 Sex                 Male 80 84 90 88 79 77 12 15 Female 84 82 94 90 85 82 15 17 Area                 Kingston MA 87 88 89 94 86 79 26 19 Other Towns 87 82 93 86 83 78 11 22 Rural Areas 76 81 93 89 80 80 6 10 Quintile                 Poorest 70 79 92 90 73 73 3 7 Second 81 90 91 90 80 81 7 14 Third 83 81 95 89 82 79 11 16 Fourth 89 87 95 88 87 85 8 20 Richest 91 77 84 88 94 83 40 33 Source: 2018 JSLC and PER (WBG 2021) Note: The net attendance rates for a given level of education is the percentage of the theoretical-school-age population that is attending that level of education. Theoretical ages: preschool (3-5 years old), primary education (6-11 years old), lower secondary education (12-14 years old), upper secondary education (15-16 years old), and tertiary education (17-21 years old). JAMAICA POVERTY Human Capital 44 ASSESSMENT Educational attainment remains low, and disparities across socioeconomic groups persist. In 2021, only 35 percent of Jamaicans aged 25-64 had completed secondary education (grade 11 or sixth form), and only 20 percent had attended tertiary (university or other public/private tertiary school). Women are more likely than men to complete secondary and tertiary education; it is also the case for people living in GKMA compared to those in OUC and rural areas (Figure 3.5). Stark disparities in educational attainment along the economic gradient are also evident. On average, the likelihood of attending tertiary is eight times higher for adults in the top quintile, compared to those at the bottom. In contrast, people in the lowest quantile are 6.4 times more likely than those at the top to attain only primary schooling. Poor men living in rural areas are less likely to compete post- secondary education because they exit the system to work in agriculture and fishery, craft, and related trades. Figure 3.5: Educational attainment (ages 25-64), by sex, area, and quintile, 2021 100% HEART 80% 60% Tertiary 40% Secondary (grade 20% 11 or sixth form) 0% Some secondary (grade 7-10) OUC GKMA Jamaica Male Female Rural Poor Non-poor Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Primary (or less) Sex Area Poor Quintile Source: WB staff estimates using JSLC (2021) Although public school is free, financial constraints disproportionately affect students and families in the lowest socioeconomic quintile. In 2018, the share of students who were kept from school due to money problems was 6 percent, but the share varied from 11 percent for the bottom quintile to less than 1 percent for the top group. As explained in detail in Chapter 4, public school is free, but students still pay for uniforms, materials, and other expenses, which are often unaffordable for the poorest families. “Lack of interest” is the most common reason for boys dropping out of school; for girls, it is pregnancy. Indeed, Jamaica is characterized by declining but relatively high rates of teenage pregnancy for its level of income. At 48 births per 1,000 women ages 15-19, Jamaica’s adolescent fertility rate is below the LAC average (60) but still far above the for upper middle-income country average (29). Young Jamaicans’ lack of interest in school is partly explained by low employment opportunities, but evidence shows education can help protect people from poverty. The analysis on returns to education confirms the importance of completing a degree in Jamaica – in line with the findings in Chapter 2 that poverty decreases from 24.4 percent when the household head has only a partial secondary education to 9.1 percent for heads who completed secondary education. The estimated effect of completing upper secondary on consumption (proxy for wages in the absence of direct data) ranges from 20 percent to 28 percent across specifications, conditional on having attended 11 years of school.26 26 For the analysis of returns to education, the estimation follows Jaeger and Page (1996) and uses a model that includes years of education, a spline knot at 6, 11, and 13 years, and dummy variables for specific degrees received. In the absence of wage data, the model estimates the returns to education on the log of adult equivalent per capita consumption for the population 15+ years of age. The analysis assumes that those with some college or post-secondary degrees have completed high school. JAMAICA POVERTY Human Capital 45 ASSESSMENT Wealthier households opt for private schools that are farther away from their homes partly due to quality concerns. Jamaica’s schools are typically close to residential areas, with an average distance of 2.2 kilometers for the nearest primary school and 4.5 kilometers for the nearest secondary school. Nevertheless, students tend to attend schools farther from their home. On average, primary school children attend schools 4.7 kilometers from their homes, and the distance for secondary school children is 13.3 kilometers. Non-poor households select private schools for primary education despite being farther away from their homes (6.7 kilometers compared to 2.4 kilometers for the nearest school) partly because of parental dissatisfaction with public education due to large class sizes, the lack of attention to students, and concerns about crime and violence in public schools (Heyneman and Stern 2014). Non-poor households also have more school choice options because they tend to have greater access to transportation. Among non-poor children, 63.3 percent use public transport to school, 21.3 percent walk, and 12.8 percent use private vehicles. In contrast, the figures for poor children are 53.5 percent using public transport, 41.1 walking, and 3.3 percent private vehicles. Jamaica underinvests in early childhood education despite growing evidence on its effectiveness for development, particularly for low-income students. Investments in early childhood programs have positive impacts on long-term outcomes for beneficiaries including their future earnings, and on society through lower crime rates and public health improvements (Heckman et. al 2011). For instance, Berlinski, Galiani and Gertler (2009) find an 8 percent increase in student performance on third grade tests for each additional year of pre- primary education. This increase in performance facilitates future labor market entry and increases the probability of employment, which translates into higher earnings. Furthermore, evidence suggests that the greatest benefits of early childhood interventions accrue to the most disadvantaged children. In Jamaica, Gertler et al. (2014) conducted a follow-up study 20 years after a pilot early stimulation and nutrition program. The results indicate that program beneficiaries had 25 percent higher earnings than the children in a comparison group. Despite this growing body of evidence, Jamaica’s investments in early childhood education are largely financed privately and represent only a fraction of the budget allocated to social services. Community-operated basic schools and private kindergartens account for about 80 percent of the enrollment at this level, which are mainly financed through tuition fees and nongovernment support. Only a small fraction of these centers is certified by the Early Childhood Commission, meeting all standards for a quality education (WBG 2021). Learning Outcomes Jamaican students do not achieve minimum learning standards, and they underperform peers in other Caribbean countries. Only 65 percent of fourth grade students acquire foundational skills in numeracy and 85 percent master literacy. According to the Caribbean Secondary Education Certificate (CSEC) examinations in 2018, only 47 percent of students pass the mathematics assessment (grades I-III) by the time they reach 11th grade, while 68 percent pass the English Language test (Ministry of Education 2019). Although comparisons may be difficult to interpret due to cohort effects, the pandemic appears to have deepened learning poverty. CSEC results show that the share of students with a passing grade in mathematics dropped to 38.2 percent in 2021. The positive effect of near universal access to education is diminished by poor learning outcomes. A child in Jamaica can expect to complete 11.4 years of education by age 18. After adjusting for the quality of learning, however, average years of schooling is only equivalent to 7.1, a learning gap of 4.3 years.27 Low learning levels start to show 27 See footnote 17 for details on learning-adjusted years of education. JAMAICA POVERTY Human Capital 46 ASSESSMENT early: in 2018, only 65 percent of fourth grade students acquired mastery of foundational skills in numeracy, and 85 percent of fourth grade students achieved mastery of literacy. Outcomes deteriorate further as students advance to secondary school, with only 47 percent of applicants passing mathematics and 68 percent passing English in the 2018 CSEC examinations (WBG 2021). Furthermore, the quality of education is an important bottleneck to building a highly skilled workforce in Jamaica. The country obtained the second to last lowest harmonized learning outcomes among structural, aspirational, and regional peers with data, second to last after the Dominican Republic (Figure 3.6). Figure 3.6: Quality of education, circa 2020 a) Harmonized learning outcomes b) Learning adjusted years of school 473 488 14 463 430 436 Learning adjusted years of school 387 390 12 345 Croatia 10 Mauritius Seychelles Montenegro 8 Jordan Lebanon Dom.Rep. 6 Jamaica 4 2 Jamaica Lebanon Jordan Montenegro Seychelles Mauritius Croatia Republic Dominican 0 0 2 4 6 8 10 12 14 Expected years of school Source: World Bank based on Human Capital Project (2020) Pandemic-related school closures likely exacerbated the learning crisis and educational inequalities. While the length and intensity of the school closures varied among countries, schools in Jamaica were on average fully closed between March 2020 and March 2022, mostly or partly closed for most of the effective number of school days. Furthermore, data from the Jamaica HFPS indicate that around one of four students were not actively engaged in any learning activity by May/July 2021. World Bank estimates indicate that Jamaica will lose 1.5 years in learning- adjusted years of schooling (LAYS) because of the pandemic – from 7.1 to 5.6 LAYS. This entails an average annual earning loss per student of US $1,099 (2017 PPP), which aggregates to a total lifetime learning loss of US$5.5 billion, a third of Jamaica’s annual GDP. In response to the crisis, the government prioritized delivery of tablets to children registered in conditional cash transfer programs. Due to poverty and the lack of infrastructure, however, the experience of remote learning was likely unequal for students from different socioeconomic backgrounds. Evidence on this issue in Jamaica is limited, but studies for Ethiopia, Peru, India, and Vietnam show that students in the bottom quintiles are more likely to be out of school and learning due to limited access to information technology (Hossain 2021). Recent estimates suggest that each month of school closures led, on average, to a full month of lost learning, with learning losses steeper among poorer students (Schady et al. 2023). Digital Skills Digital literacy remains low in Jamaica, particularly for the poor and rural population. Digital skills are crucial to benefiting from opportunities generated by ICT; however, according to an index measuring the complexity of computer-related activities,28 Jamaicans’ digital literacy is low, with the average individual aged 15 and above 28 The index is constructed using the 2018 Survey of Living Conditions. The questionnaire asks about computer-related activities people JAMAICA POVERTY Human Capital 47 ASSESSMENT scoring only 21.8 out of 100 points. The difference in scores between individuals in the top and bottom quintiles was close to 20 points (31.5 vs. 14.4 percent). Richer individuals are also more likely to use the internet from work and perform a wider variety of tasks on computers. Data show 44 percent of the top 20 used the internet from work, compared to 16.4 percent for the bottom 20 percent. Regional disparities in digital literacy are also substantial. Individuals living in GKMA have an average score of 32.1 points, compared to 20 for OUC and 18.4 points for rural areas. Although the use of ICT has increased in recent decades, the level of web use sophistication remains low, particularly for the poor and rural population. In 2018, the most frequently reported activities among users ages 15 and above were the use of the internet during the three months preceding the survey for internet-based communications, including social networks (67.2 percent) and information searches (49.5 percent) (Figure 3.7). In contrast, less than one in three Jamaicans use the internet for educational and research purposes (29.8 percent) and even fewer conduct financial transactions or buy goods and services online (11.3 percent) and job search (10.1 percent). Figure 3.7: Divides in the level of web use sophistication Rich-poor divide Urban-rural divide Job search Job search Transactions Transactions Education, research Education, research Online software, storage, other Online software, storage, other Information search Information search Internet-based communication, Internet-based communication, social media social media 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Richest Poorest Rural Urban (GKMA+OUC) Source: WB staff estimates using JSLC (2018) The COVID-19 pandemic has underscored not only digital inequalities but also the value of digital skills. The abrupt transition of schools to distance learning stressed the importance of digital skills for students who will need to adapt to its demands. Furthermore, access to the internet and digital devices are insufficient if people lack the skills to use and benefit from them. Recent evidence shows that remote learning during the pandemic has been inadequate for poor students, mainly because they could not fully benefit from self-instruction due to the lack of family members or peers who could teach them digital skills. Coupled with exclusion from educator instruction, these students could not acquire the digital skills necessary to engage in skill development (Shulz and Robinson 2022). performed during the three months preceding the interview. Activities include copying/moving files/folders; using copy and paste tools to move/duplicate information in documents; sending e-mails with files attached; using basic mathematical formulas in spreadsheets; connecting/installing new devices; finding/downloading/installing new software; creating electronic presentations with presentation software; transferring files between a computer and other devices, writing computer programs using specialized programming language. Each activity is given a score ranging from 1 to 9 based on its level of difficulty. Individual scores are added up, divided by 45 and multiplied by 100 to obtain a score between 0 and 100. Higher values indicate higher levels of digital skills. FISCAL INCIDENCE ANALYSIS JAMAICA POVERTY Fiscal Incidence Analysis 49 ASSESSMENT • The fiscal system – government spending and taxation – can play a key role in promoting sustainable growth and reducing poverty and inequality. The incidence of taxes (direct and indirect) and transfers (direct and in-kind) across the income distribution determines the overall progressivity of the fiscal system. This chapter estimates the distributional impacts of selected components of taxation and social spending on poverty and inequality in Jamaica. • Jamaica’s fiscal system contributes moderately to reducing income inequality, but it has a poverty increasing effect. The largest reduction in inequality comes from direct transfers, but indirect taxes more than offset these positive effects. • Spending on education, health, and social protection in Jamaica is generally pro-poor. Households in the poorest quintiles tend to receive larger benefits, as a share of consumption, than those in the richest quintiles. However, a notable share of government spending on health, education, and social protection services goes to the richest quintiles, which leaves room for improved targeting. • Despite public health and basic education being free, out-of-pocket spending represents a significant burden for households – particularly for those at the bottom quintiles of the consumption distribution. The Fiscal System in Jamaica: Tax Revenues and Expenditures Jamaica had turned a fiscal deficit of 11 percent of GDP in 2009 into a 1 percent surplus in 2019. The government was able to reduce public debt from 142 percent of GDP in 2009 to 94 percent in 2019. When the economy was hit by the COVID-19 pandemic, the government temporarily reduced the fiscal balance target to increase spending on health and social protection and reduced the value added tax rate. The government responded quickly to mitigate the negative welfare impacts by launching CARE, a social and economic support program. CARE provided grants to those who were unemployed or informally employed pre-pandemic; temporary unemployment benefits to those previously employed who had been laid off or terminated since the pandemic; and grants to the self- employed whose regular earnings had been disrupted, in addition to grants to small businesses. Tax Revenues Tax revenues as a proportion of Jamaica’s gross domestic product (GDP) increased modestly in the two decades before the COVID-19 pandemic. General government revenue as a share of GDP increased by 5 percentage points between 2000 and 2019. Jamaica’s tax revenues as a share of GDP remain higher than in regional, structural, and aspirational peers, such as Barbados, Georgia, Fiji, Costa Rica, and the Dominican Republic (Figure 4.1). In 2021, general government revenues reached 30.3 percent of GDP – up from 29 percent in 2020 – due to revived economic activity. JAMAICA POVERTY Fiscal Incidence Analysis 50 ASSESSMENT Figure 4.1: General government revenue (% GDP), Figure 4.2: General government expenditures (% GDP), 2021 2021 Jamaica Fiji Barbados Barbados Georgia Georgia Fiji Jamaica Costa Rica Costa Rica Dominican Republic Dominican Republic 0 5 10 15 20 25 30 35 40 0 5 10 15 20 25 30 35 Source: IMF (Dec. 2022). Source: IMF Indirect taxes are Jamaica’s main revenue source. In the 2018-19 financial year,29 total general government tax revenue amounted to JMD 539 billion, and consumption taxes accounted for 41 percent. The personal income tax is another important source for government funding, representing 25 percent of total revenue. These consumption and income taxes, which account for two-thirds of the general government revenue, is the focus of this chapter’s incidence analysis of taxation. Other components of the revenue are not considered because of the difficulty in assigning their impact to a specific household. Similarly, taxes paid by non-residents are excluded because they are not captured in the household survey. Tax revenues remain below potential due to high levels of informality, accompanied by a complex regime, with relatively high rates, a narrow base, and numerous exemptions (IMF 2022). The main tax instruments are consumption taxes, that is a general consumption tax (GCT) and a special consumption tax, income taxes, a stamp duty, general and custom duties, transfer taxes, property taxes, education taxes, and travel taxes, among others (Figure 4.1). According to the IMF (2022), statutory rates are relatively high but provide little revenue given the country’s high level of informality and weak compliance. At the same time, the tax code is negatively affected by numerous waivers and incentives despite the recent elimination of GCT exemptions. Given the large informal sector and low tax compliance, direct taxes do not effectively yield much tax revenue. 29 The financial year in Jamaica runs from April 1, 2018, to March 31, 2019, and the JSLC 2018 employed for the analysis was fielded between May 2018 and December, 2018. JAMAICA POVERTY Fiscal Incidence Analysis 51 ASSESSMENT Table 4.1: Total revenue of general government, 2018-19 Billions (JMD) % Revenue Customs Duties 42.59 7% Income Tax 153.55 25% Stamp Duties 15.52 3% Motor Vehicle Licenses (Motor Vehicle Act) 4.14 1% Other Licenses 0.07 0% Travel Tax 20.12 3% Betting, Gaming and Lotteries-Duties, Fees and Levies 5.43 1% Education Tax 30.01 5% Contractors Levy 2.23 0% General Consumption Tax 180.62 29% Special Consumption Tax 72.15 12% Other taxes 12.93 1% TOTAL 539.35 88% NON-TAX REVENUE MISCELLEANOUS RECEIPTS (UNCLASSIFIED) 74.63 12% TOTAL RECURRENT REVENUE 613.98 100% Source: Ministry of Finance and the Public Service. Government Expenditures Jamaica’s public spending has increased since 2000 but remains below its structural peers. While government expenditures, both capital and recurrent in nominal terms, increased over the 2000-2019 period, spending as a share of GDP grew only moderately from 26.4 percent to 29.7 percent. In 2020, general expenditures increased to 32.1 percent of GDP due to the economic contraction and higher spending on COVID-19-related measures. Despite the moderate increase, general government expenditures as a share of GDP remains below peer countries, such as Fiji, Barbados, and Georgia (Figure 4.2). Jamaica’s wage bill is relatively high, limiting the scope for social spending (IMF 2022). Jamaica’s general public services represent 53 percent of expenditures, while 9 percent is allocated to health and 13 percent to education. Wages represent the most important item within education and health spending. Economic affairs, which includes spending on roads, energy, and telecommunication services (nonsocial spending), amount to 10 percent of total expenditures (Table 4.2). JAMAICA POVERTY Fiscal Incidence Analysis 52 ASSESSMENT Table 4.2: Expenditure of general government by function, 2018-19 Jamaican Dollars % Expenditure General Public Services 421,450,593 53% Defense Affairs and Services 29,582,596 4% Public Order and Safety 63,532,712 8% Economic Affairs 78,784,250 10% Environmental Protection and Conservation 3,655,357 0% Housing and Community Amenities 9,117,121 1% Health Affairs and Services 70,239,627 9% Recreation, Culture and Religion 5,186,211 1% Education Affairs and Services 106,876,948 13% Social Security and Welfare Services 14,137,726 2% Net Total 802,563,141 100% Source: Ministry of Finance and the Public Service. Fiscal Incidence Analysis Fiscal incidence analysis is useful to understand who pays and who benefits from the tax and transfer system. The analysis in this chapter follows the Commitment to Equity (CEQ) methodology, a rigorous approach developed by the CEQ Institute in Tulane University (Lustig 2018) to analyze the impacts of taxes and public spending on poverty and inequality. It employs a framework that is comparable across counties and over time based on the premise that fiscal policy, expenditures, and revenue collection are allocated to individuals and households included in a household survey. The analysis aims to answer the following questions: How much inequality and poverty reduction is being accomplished through taxes and social spending? Who are the net payers and beneficiaries of the fiscal system? Are taxes and social spending pro-poor? Due to data limitations, the analysis does not account for a range of taxes and spending programs in analyzing the distributional impacts. The basis for the fiscal incidence analysis is the construction of income concepts. The analysis creates seven income concepts to examine the amount of redistribution in Jamaica achieved through the fiscal system and its impact on poverty and inequality (Figure 4.3). The analysis employs all income concepts to measure inequality and progressiveness, poverty, and the amount of redistribution achieved with and without the different fiscal instruments. Because the JSLC30 does not collect income data, the analysis in this chapter follows Lustig and Higgins (2013) and assumes that per capita consumption is equivalent to disposable income. All other income concepts in the CEQ framework are calculated “working backwards” from disposable income to market income (see Table A2.2 in Annex 2). 30 This study uses the 2018 JSLC, with a sample size of 4,547 households and 13,109 individuals, together with budget and administrative records for 2018-19 including government and IMF statistics, revenues and spending data for the general government, reports on tax rates and exemptions, and information on expenditures and beneficiaries of social programs. JAMAICA POVERTY Fiscal Incidence Analysis 53 ASSESSMENT Figure 4.3: Definition of CEQ income concepts Taxable Non- taxable Income Contributory income pensions Direct transfers • Conditional or unconditional cash transfers Gross Market Income Direct Indirect taxes Co-payments • Near-cash transfers Income taxes • VAT (GCT, SCT) • User fees • Income from work (wages/salary + in-kind benefits) • Income from capital Market • Self-provision of Disposable Consumable Final Income plus goods/services Income Income Income Pensions • Private transfers, remittances or alimony • Private pensions In-kind transfers • Imputed rent Direct taxes Direct Net Market transfers • Monetized • Personal income tax Income value of education • Education tax and health services Contributions to pensions Source: Adapted from Lustig and Higgins (2013). Distributional Impacts of the Fiscal System in Jamaica The fiscal system in Jamaica contributes moderately to reducing income inequality. In 2018, the tax and transfer system contributed to a reduction in inequality by 1.8 points in the Gini index – from 37.6 at market income to 35.8 at consumable income (Figure 4.4). Going from disposable income to consumable income slightly decreases inequality after accounting for indirect taxes, partly because of exemptions to specific food items (-0.3 in Gini index). Furthermore, the Gini index decreases to 35.1 (-2.5 points) with inclusion of in-kind transfers, that is, the monetized value of health and education services. These values, however, do not account for the low quality of some services, described in Chapter 3. The largest reduction in inequality comes from the effect of direct social transfers, with the Gini index of disposable income falling to 36.1. Jamaican fiscal policy exhibits a poverty increasing effect. In 2018, fiscal policy contributed to an increase of 2.6 percentage points in the poverty rate (using the national poverty line) from 14 percent at market income to 16.6 percent at consumable income (Figure 4.5). Direct transfers have a poverty-reducing effect in Jamaica (-1.2 percentage points) in moving from net market income to disposable income. Indirect taxes, however, more than offset these effects with a 3.6 percentage point increase when moving from disposable income to consumable income. JAMAICA POVERTY Fiscal Incidence Analysis 54 ASSESSMENT Figure 4.4: Inequality moving from market to final Figure 4.5: Poverty rates moving from market to income consumable income 37.6 17% 37.0 37.0 36.7 Poverty rate (%) 14% 14% 36.1 13% Gini index 35.8 35.1 Market income + pensions Net market income Gross income Taxable income Disposable income Consumable income Final income Market income Net market income Disposable income Consumable income Source: WB staff estimates using JSLC (2018) Source: WB staff estimates using JSLC (2018) Effects of Taxes and Transfers Direct taxes in Jamaica are progressive but have limited equalizing effects. The Kakwani index31 is the highest for the personal income tax (0.43), making it the most progressive tax in Jamaica, with only two tax brackets and exemptions for low-income individuals (Figure 4.6). The education tax (0.176), the property income tax (0.109), and contributions to the National Insurance Scheme (0.053) are also progressive. Despite their progressivity, direct taxes only have a small redistributive effect in Jamaica, with the Gini index decreasing by less than 1.0 point. This is mainly due to the relatively small size of direct taxes in relation to pre-fiscal income (2.7 percent). Direct taxes have a small poverty-increasing effect in Jamaica. Using the national poverty line, the poverty rate increases by 0.1 percentage point. This is mainly because low-income workers under formal labor arrangements pay the education tax (Figure 4.7). The effect of indirect taxes is relatively neutral in terms of equality. The VAT is usually regressive because consumers, regardless of income level, pay the same fixed rate,32 and lower-income individuals tend to spend a larger proportion of their income on goods subject to VAT than higher-income households. The effective VAT rate represents 8.9 percent of total pre-fiscal income, and the Kakwani index is small but slightly positive (0.02), because most basic food and services are exempt from VAT. Indirect taxes have a poverty-increasing effect in Jamaica. Overall, indirect taxes have a non-trivial increasing effect on poverty. National poverty rates increase by 3.6 percentage points after accounting for all indirect taxes. As it will be explained in the following section, the effect of indirect taxes cannot be offset by direct transfers, even with targeting for the poorest households, partly because the transfers are small but also because of leakages. 31 The Kakwani Index is a measure of progressivity. It is calculated for taxes by subtracting the concentration coefficient from the Gini coefficient, and for transfers by subtracting the Gini coefficient from the concentration coefficient. A value greater than zero represents a progressive tax or transfer, while a value below zero represents a regressive tax or transfer. The minimum and maximum values of the Kakwani Index depend on the size of the Gini coefficient. 32 The analysis in Jamaica does not account for informality in the point-of-sale and may lead to an overestimation of consumption taxes’ regressivity. Taxing consumption can be progressive after accounting for informal point-of-sale locations where VAT are not collected. The budget share spent at informal vendors steeply declines with income; thus, the effective tax rate of a consumption tax rises with income (Bachas et al. 2023). JAMAICA POVERTY Fiscal Incidence Analysis 55 ASSESSMENT Figure 4.6: Progressivity of taxes and contributions Figure 4.7: Marginal effects of taxes and (Kakwani index) contributions All taxes All taxes All direct taxes All direct taxes Value-added tax Value-added tax NIS contribution NIS contribution Property tax Property tax Education tax Education tax Income tax Income tax 0.0 0.1 0.2 0.3 0.4 0.5 -0.04 -0.02 0.00 0.02 Kakwani index Poverty reduction effect Redistributive effect Source: WB staff estimates using JSLC (2018) Source: WB staff estimates using JSLC (2018) Jamaica’s direct transfers are progressive and have small but positive redistributive effects . Direct transfers33 represent 1.02 percent of pre-fiscal income in Jamaica and only reduce inequality by 0.6 point in Gini index. The largest programs are School Feeding Programme, administered by the School Feeding Unit of the Ministry of Education and Youth (0.66 percent), and the Programme of Advancement Through Health and Education (PATH), administered by the Ministry of Labour and Social Security (0.24 percent) (Table A.2.1). The Kakwani index is positive for all direct transfers, but the School Feeding (0.65) and PATH (0.75) stand out as Jamaica’s most progressive social interventions (Figure 4.8). The National Health Fund (NHF) is progressive but with a smaller effect compared to School Feeding or the PATH. The Poor Relief Program and Jamaica Drugs for the Elderly (JADEP) are also progressive but have no redistribution effects, mainly because they are very small. Despite their progressiveness, direct transfers have a small effect on poverty reduction . Direct transfers only reduce poverty by 1.2 percentage points using the national poverty line, mainly through the School Feeding Programme, with its marginal contribution of 0.6 percentage point (Figure 4.9). Both the School Feeding Programme and PATH exhibit negative concentration coefficients, suggesting accurate targeting of the poorest households. Specifically, the poorest 40 of percent households receive 68 percent of benefits for PATH and 59 percent for School Feeding. In 2018, 74.9 percent of households in the first quintile and 63.7 percent in the second reported having received PATH benefits at some time, compared to 35 percent in the top quintile. JADEP and the Poor Relief Programs are both very small programs that have no measurable poverty-reducing effect. Indirect transfers are progressive but barely contribute to reducing inequality . The analysis focuses on two main indirect transfers – tuition assistance subsidies,34 which represents 0.96 percent of pre-fiscal income, and the NHF, which represents 0.47 percent. Assuming tuition assistance benefits children in public 33 Direct government transfers include, but are not limited to, conditional cash transfer programs, non-contributory pensions, scholarships, and public works programs. tuition and examinations after the successful completion of a course of study. The assumption made in the analysis is that all children 34 The goinggovernment allocates to public school resources to The are beneficiaries. examination pay imputed value for for fees eachhigh-school students child is JMD in the 16,661 (JMD PATH 4,759 program million and provides divided refunds by 285,637 for children captured in the survey as going to public schools). JAMAICA POVERTY Fiscal Incidence Analysis 56 ASSESSMENT schools, the program appears progressive, with a Kakwani index of 0.545. The program targets the poorest households, slightly reducing income inequality by 0.5 point in the Gini index. On the other hand, the NHF is moderately progressive, but a large portion of benefits goes to households in the top quintiles, with no contribution to reducing inequality (Figure 4.10). Figure 4.8: Progressivity of transfers (Kakwani Figure 4.9: Marginal contributions of transfers Index) 0.015 0.7 Marginal contribution 0.6 0.6 0.5 Kakwani index 0.01 0.4 0.4 0.2 0.005 0.2 0 for the Elderly PATH Jamaica Drugs School Feeding Programme All direct transfers (excl. CP) National Health Fund (NHF) Tuition assistance subsidies All net in-kind transfers Poor Relief for the Elderly PATH Jamaica Drugs School Feeding Programme All direct transfers National Health Fund Tuition assistance subsidies All net in-kind transfers Poor Relief Redistributive effect Poverty reduction effect Source: WB staff estimates using JSLC (2018) Source: WB staff estimates based on JSLC 2018 Indirect transfers’ poverty-reduction impact is limited, partly because of the small size of programs and/or weak targeting. Tuition assistance reduces poverty by 1.04 percentage points and the transfers associated with the NHF have a small poverty-reducing effect of 0.44 percentage point, both using the national poverty line. Figure 4.10: Distribution of transfer program spending, by quintile 3% 8% 8% 11% 12% 16% 13% 30% 12% 14% 28% 17% 17% 18% Share of total spending 28% 21% 19% 22% 22% 21% 23% 28% 8% 25% 24% Q5 (richest) 18% 20% 23% 22% 19% Q4 Q3 40% 14% 16% Q2 31% 34% 34% 27% 27% Q1 (poorest) 14% 14% for the Elderly PATH Jamaica Drugs School Feeding Programme All direct transfers (excl. CP) National Health Fund (NHF) Tuition assistance subsidies All net in-kind transfers Poor Relief Source: WB staff estimates using JSLC (2018) Note: Pre-fiscal income refers to market income plus pensions. Direct transfers exclude contributory pensions. JAMAICA POVERTY Fiscal Incidence Analysis 57 ASSESSMENT Incidence of Structural Social Spending 35 Education Jamaica’s public expenditures on education have averaged around 5 percent of GDP since 1990, with most resources devoted to primary and secondary levels. The education system in Jamaica is divided into early childhood (ages 3 to 5), primary (ages 6 to 11), secondary (ages 12 to 16) and tertiary (ages 17+). In 2019, total education expenditure was JMD 111 billion (US$744.5 million) and represented 19 percent of all government outlays, higher than the share in most regional and international peers. The expenditures were allocated at 29 percent for primary and 38 percent for secondary. Despite existing evidence on the importance of early childhood education for development, public expenditure on pre-primary was only 3 percent of the total, whereas tertiary education accounted for 18 percent. The remaining 12 percent was spent on special education and subsidiary services, such as provision for school feeding programs. Compared to peer countries, Jamaica spent only half as much on pre-primary but twice as much on tertiary (WBG 2021). Jamaican structural expenditures on education are pro-poor, particularly in the early childhood and primary levels. A large portion of students from the lowest socioeconomic quintiles are enrolled in public institutions in early childhood and primary education. Secondary education is neutral for poverty, as a similar proportion of students from lower and higher socioeconomic quintiles attend public schools. Yet, 15 percent of the poorest students do not complete secondary education, compared to 2 percent for higher income students. As in other countries, students from higher socioeconomic quintiles are overrepresented at tertiary institutions, making tertiary education spending regressive. Government spending on school feeding programs is progressive but does not reach all vulnerable students. Consistent with the findings of the fiscal incidence analysis, about 31 percent of primary students in the lowest socioeconomic quintile receive free meals at their schools, compared to 2 percent of students in the highest socioeconomic quintile. At the secondary level, the figures are 23 percent for the bottom quintile and 1 percent for the top quintile (Figure 4.11). However, the program stipulates that those who do not attend school for five or more days in a month are not eligible get free school meals. Given that missing school days is correlated with socioeconomic status, these students might be in the most immediate need of the program, which should be reoriented to cover them. Improving the program’s targeting by removing students in the top two quintiles would allow reallocating the resources more efficiently by for example extending the program to those that do not attend for more than five days due to economic reasons. 35 This section analyzes the incidence of the structural spending of the education, health, and social protection sectors. It reviews the most salient elements of the incidence of structural spending using recent PERs for each sector to complement the fiscal incidence analysis presented in the previous sections. JAMAICA POVERTY Fiscal Incidence Analysis 58 ASSESSMENT Figure 4.11: Percentage of students who receive free meals at school, by quintile and education level 31% 23% 20% 14% 11% 8% 9% 9% 7% 4% 2% 2% 0% 0% 1% Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Expenditure quintile Pre-primary Primary Secondary Source: WB staff estimates using JSLC (2018) Government spending on secondary education fees is neutral for poverty. In 2016, Jamaica implemented a policy to reduce the cost of education by stipulating that the government would absorb the cost of core operational services, and parents would provide non-mandatory contributions for sports and other co-curricular and special school development activities. Under this policy, all students should be able to access schools regardless of their socioeconomic status. To support the program, the government has allocated JMD 17,000 per secondary student to the schools in lieu of fees since 2017. However, parents still pay auxiliary fees to public and private schools because the schools state that the public resources are inadequate to operate. Parents’ contributions amounted to JMD 1.5 billion a year in 2017 for secondary education in auxiliary fees (in public schools), and the government transferred JMD 3.7 billion to compensate for tuition fees in public and private schools. The distribution of support for fees seems to be neutral with respect to poverty, but there is room to analyze the implementation of the fee policy because the poorest students pay proportionally more in “voluntary fees” relative to per capita consumption (Figure 4.12). Figure 4.12: Auxiliary fees in secondary education by quintile (share of consumption) 3.0% 2.6% 2.6% 2.5% 2.0% 1.8% 1.8% Percentage 1.4% 1.5% 1.0% 0.5% 0.0% Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Expenditure quintiles Source: WB estimates using JLFS (2018) JAMAICA POVERTY Fiscal Incidence Analysis 59 ASSESSMENT Health In total health expenditures, Jamaica is similar to other countries in the region but slightly below some aspirational and structural peers. Jamaica’s current health expenditures represent 6 percent of GDP, similar to other countries in the Caribbean but below peers Costa Rica and Georgia (both above 7.6 percent). Consistent with Jamaica’s commitment to universal health coverage, domestic general government health expenditures as a share of GDP has seen an upward trend in the past decade, exceeding allocations of most peers, except for Costa Rica. Jamaica’s health system strongly depends on the private sector because some elementary service provision exceeds state capabilities. Jamaica has a two-tiered health system. Public-sector involvement is limited to the provision of primary care, public health, and hospital care; the government does not cover ambulatory services and medicines, which are consequently provided privately. Inpatient care, drugs and diagnostics, overseas care, and training and research are all funded by a combination of public and private sources, but public finances rarely cover expenses incurred outside the public service delivery. Figure 4.13: Health subsidy incidence among injured and ill patients, by quintile (share of consumption per adult equivalent) 78% % of consumption 52% 37% 29% 28% 18% 11% 9% 3% 4% Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Expenditure quintile Primary health care subsidy Inpatient cost subsidy Source: WBG 2017a Health expenditures in Jamaica are pro-poor, but a significant share of resources goes to the richest quintiles. In-patient cost and primary health care subsidies decrease with income and represent a higher share of consumption for households at the bottom of the distribution than for those at the top (Figure 4.13). Among households with members who were injured or ill, primary care subsidies represent 29.3 percent of expenditures of the poorest quintile and only 2.7 percent of the richest one. Similarly, subsidies for inpatient services represent 78.3 percent of individuals’ total consumption in the lowest quintile and 4.4 percent in the highest. This does not imply the poor receive a larger share of the service benefits (or health spending). The bottom quintile receives about 20 percent of the total subsidies for primary health care, and 18 percent of subsidies for inpatient service – just about what they would receive if subsidies were evenly allocated among quintiles. Although the wealthiest quintile receives a smaller proportion, individuals in the second and fourth quintiles seem to be obtaining the largest share of subsides (Figure 4.14). JAMAICA POVERTY Fiscal Incidence Analysis 60 ASSESSMENT Figure 4.14: Distribution of health service benefits by quintile Primary health care Inpatient services 8% 14% 18% 20% Q1 (poorest) Q2 Q3 35% 24% 23% 24% Q4 Q5 (richest) 19% 16% Source: WBG 2017a Overall, health expenses represent a heavier burden on the poor population. As mentioned in Chapter 3, Jamaica abolished public health fees, but out-of-pocket health expenditures average over 1.1 percent of the total expenditures for individuals of the poorest quintile; and medicines account for almost 80 percent of these costs. For individuals of the richest quintile, out-of-pocket health spending represents just 0.5 percent of total expenditures. These differences are even higher when considering the most vulnerable injured and ill sub- population of each quintile (Figure 4.15). Among this group, households in bottom quintile spend, on average, 12 percent of their consumption on medicines supplied by private providers, whereas the share is 3.9 percent for the top quintile. Figure 4.15: Out of pocket expenditures among injured and ill patients, by quintile (share of consumption expenditure per adult equivalent) % of consumption 12.1% Private sources - medicines 8.5% 8.5% 6.2% Private sources - primary care expenses 3.9% Public sources - primary care expenses 2.7% 2.7% 2.7% 3.4% 2.1% 0.2% 0.6% 0.8% 0.2% Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Quintile Source: WBG 2017a Social Protection In Jamaica, social assistance covers almost 40 percent of the population, but exclusion errors exist. This share is lower than in Uruguay (almost 60 percent) or Ecuador (almost 70 percent), but higher than in the Dominican Republic and Belize. While more than 60 percent of the Jamaican population does not benefit from any social assistance program, the coverage in the poorest quintile rises to 83 percent. Conditional cash transfer coverage rises to 69.9 percent, and the coverage of the School Feeding Programme is 49.5 percent, three times higher than the LAC average. Nonetheless, there are more than 100,000 poor children, more than 25,000 poor elderly, JAMAICA POVERTY Fiscal Incidence Analysis 61 ASSESSMENT and more than 245,000 poor working-age adults who are not protected with social assistance. In 2017, 52.5 percent of children in extreme poverty did not directly benefit from either the PATH or Poor Relief program. Similarly, 58.2 percent of the elderly in poverty reported not receiving benefits directly from these programs or the National Insurance Scheme (NIS). Poor workers are less likely than the non-poor to be covered by old age pensions. Social insurance covers the elderly population through the NIS. Despite coverage improvements over time (among men and women and across regions), NIS coverage in 2017 was lowest among the poorest quintiles at 27.5 percent vs. 60.1 percent for the top quintiles. People in the top quintiles are more likely to be formal workers; thus, more likely to be beneficiaries than those in the bottom quintiles. In 2020-2021, to narrow the pension coverage gap and reduce old age poverty, the government established a social (noncontributory) pension. It only covers people over age 75 who do not receive any other social benefit or pension. Although it is a step in the right direction, the program is limited in scope, and its effectiveness still needs to be evaluated. Jamaica’s PATH conditional cash transfer and the School Feeding Programme are both pro-poor. As shown with the incidence analysis, a large share of beneficiaries of both programs concentrates in the distribution’s bottom quintiles. These patterns are similar to those in other LAC countries, but targeting can still be improved to reduce inclusion and exclusion errors. In 2018, for instance, 35 percent of people in the top quintile reported having ever received PATH benefits, compared to 74.9 percent in the bottom quintile (PIOJ 2018). Among elderly beneficiaries, the proportion is even higher (76 percent). Among children and adults, 59 percent of beneficiaries are not poor. PATH is not alone in covering those who are not poor, despite efforts to improve targeting.36 36 According to the Jamaica Social Protection Public Expenditure Review (2019), most LAC conditional cash transfers program provide non- poor benefits at about 40 percent on average. It also shows that Jamaica (60 percent) remains above LAC average. POLICY RECOMMENDATIONS JAMAICA POVERTY Policy Recommendations 63 ASSESSMENT Jamaica’s National Development Plan – Vision 2030 – identifies 15 national outcomes grouped under four goals under the vision statement “Jamaica, the place of choice to live, work, raise families, and do business.” The goals are geared toward: strengthening human capital to ensure that Jamaicans are empowered to reach their fullest potential; addressing security, justice, and social cohesion; fostering a stable macroeconomy; and securing the resilience of the natural environment. In addition, the NPP/NPRP defines two policy goals: (i) eradicating extreme (food) poverty by 2022, and (ii) reducing the national poverty prevalence to less than 10 percent by 2030. The recommendations below aim to support the achievement of Vision 2030, particularly the goal of Jamaicans reaching their fullest potential, and the NPP/NPRP poverty reduction goals. The asset-based framework serves as a pivotal tool for synthesizing the insights from the previous chapters and identifying strategic interventions for lasting poverty reduction in Jamaica. This approach illuminates the interplay between asset accumulation, their intensity of use, and the returns to these assets, which are at the core of household income generation and welfare. The value of market income can be supplemented by transfers received, affected by the set of prices of goods and services consumed, and modulated by positive and negative shocks. In Jamaica, the poor and others in the bottom 40 often have less education and find themselves in insecure low-productivity jobs with low returns. As we turn to policy recommendations, strategic interventions aimed at enhancing human capital endowments, bolstering their productive use, and improving the economic returns they yield, stand as critical levers for lasting poverty alleviation and greater shared prosperity. Building greater resilience to a range of shocks will be critical to protecting vulnerable households, and fiscal policy can help through progressive taxes and well targeted transfers. Economic Transformation for Lasting Poverty Reduction To achieve sustainable development with lasting poverty reduction and shared prosperity, Jamaica needs to transition to a higher growth path that prioritizes environmental sustainability, social inclusion, and resilience to economic shocks. This shift requires a change in the country’s development model to better capitalize on its comparative advantages, foster innovation, and enhance workforce skills. These elements are essential for increasing productivity and supporting the transition to a low-carbon economy, with a focus on targeted policies and investments that promote innovation and structural transformation. However, the need for ongoing fiscal consolidation restricts the government’s ability to significantly increase pro-poor and growth-enhancing expenditures. Consequently, it is crucial to emphasize creating an enabling environment, coupled with the necessary infrastructure and regulatory support, to facilitate the private sector’s increased participation in driving sustainable and inclusive economic growth in Jamaica. This could encompass efforts to maximize the potential of tourism and other enclaves while further leveraging opportunities in the knowledge economy. Achieving higher and sustainable economic growth is also essential for supporting fiscal stabilization, which in recent years has had to rely on fiscal austerity measures and liability management (WBG 2022). Fully harnessing the productive potential of Jamaica’s youth will be key to increasing poor households’ income-generating capacity and their contribution to a structural transformation of the economy. Low educational outcomes have been made worse by extended school closures during the pandemic. According to an optimistic scenario from World Bank simulations, Jamaican youth will lose 1.3 learning adjusted years of schooling (LAYS) because of the pandemic. Their future income-earning potential could be reduced. Education’s weak link to work JAMAICA POVERTY Policy Recommendations 64 ASSESSMENT has combined with rising crime and violence to impede human capital accumulation and constrain economic opportunities. These factors also undermine returns to human capital especially for women and youth. Along with the behavioral dimensions of crime and violence, these constraints trap the country in a slow-growth cycle, marked by high migration of human capital, deepening reliance on low-skill, low-productivity activities, and high incentives for crime and violence. Given the issues of human capital and crime and violence, this pathway is closely aligned with other priority areas (WBG 2022). With most of Jamaica’s poor residing in rural areas where agricultural activities constitute the main source of livelihoods, improving agricultural productivity combined with an expansion of viable nonagricultural activities offer a path to achieving broader poverty reduction in rural areas. On average, poverty reduction tends to be greater with growth in agriculture, compared to an equal amount of growth in other sectors (Christiaensen and Martin 2018). Improvements in agricultural productivity have the potential to reduce poverty by releasing agricultural labor to nonagricultural activities, or by pulling surplus labor from less productive home production into agriculture (Emran and Shilpi 2018). With higher agricultural productivity, poor households in rural areas have the potential to benefit through different mechanisms: directly as producers when costs fall more than prices, indirectly as consumers through lower prices, or as agricultural laborers through increased employment and higher wages. In Jamaica, the Country Private Sector Diagnostic identified boosting high-value agriculture both for domestic consumption and export as a key opportunity that can improve productivity, stimulate growth, and expand employment opportunities. Investments in Nutrition Smart Agriculture technologies can have an added benefit of addressing food security and poor nutritional outcomes in the country. Given Jamaica’s high vulnerability and low resilience to shocks, sustainable economic growth requires effective adaptation and mitigation measures. Poor and vulnerable Jamaicans are exposed to a variety of risks, including macroeconomic, climatic, crime, and health shocks, that can adversely impact households’ income-generating capacity. Strengthening household resilience to the impacts of shocks requires a multipronged approach centered on reforms to bolster social protection and improve access to essential services that promote the livelihoods of the poor and vulnerable. Increasing the efficiency of spending in these areas will be critical in a context of fiscal consolidation. Priority should be given to youth, women, and people with disabilities – all of whom are highly susceptible to unemployment and poverty. Lower debt and a more diversified economy will also improve resilience. In addition, building fiscal buffers through the country’s contingency funds will provide earmarked resources to respond to shocks. Reforming the management of natural resources is also key to a more prosperous, sustainable, and inclusive future for Jamaicans (WBG 2022). Strengthening Human Capital and Gender Equality for Poverty Reduction Policies to facilitate women’s access to the labor market and quality employment and to reduce vulnerability (of women and men) include improving family and care policies, active labor market programs, and social protection. According to the Jamaica Gender Assessment (WBG 2023), unpaid care and domestic work take on average 18.1 percent of women’s daily time; men’s share is 8.2 percent. Moreover, 45.2 percent of women report paid work as their main activity, compared to 62.7 percent of men. This uneven distribution of household chores and caregiving responsibilities is a major barrier to women’s participation in paid work. Recommended actions JAMAICA POVERTY Policy Recommendations 65 ASSESSMENT include implementing shared parental leave, providing child benefits and leave to care for sick relatives, and developing the necessary regulations to make legal provisions effective in this area. Equally important is to improve employment services and labor market intermediation systems targeting vulnerable women, expand the coverage of free quality childcare among vulnerable families, introduce unemployment insurance, and expand the coverage of social protection mechanisms to the informal sector. Fostering human capital accumulation requires addressing learning gaps between students from different socioeconomic levels, geographical areas, and genders. Jamaican learning outcomes are low. The country’s average test scores are 387, the second lowest among peers. Jamaican children are in school an average of 11.4 years, but effective years of schooling is only 7.1 years in terms of what they learn, below the average for structural and aspirational peers. While the government has made efforts in the area, a major issue has been increasing the number of certified teachers. This entails not only raising the quality of teacher training institutions to improve teaching methods and student learning outcomes but also developing teachers’ digital skills and effectively integrating ICT in teaching practices as part of in-service teaching. There is a high turnover rate among teachers, partly because of low salaries. It is also important to attract good quality teachers to rural areas and bring more men into the profession, both at the primary and secondary levels. Some studies have highlighted the possible links between the lack of male role models in schools and lower levels of academic achievement, higher dropout rates, and behavioral problems among boys. The losses in human capital exacerbated by the pandemic require immediate action to achieve progress in poverty reduction. COVID-19 negatively affected health, school attendance, and learning, the quality of employment, and employment among youth. To address the potential long-lasting impacts on well-being, it is important to provide targeted support to students in the bottom quintiles with the highest risk of dropping out of school, along with focused, practical training for teachers and school leaders on tailoring instruction through teaching at the right level (WBG 2021). Identifying these low-income at-risk students requires adapting targeting mechanisms for these interventions and support. Equally important is preventing further dropouts in secondary schools by implementing interventions that improve incentives and teach the value of education. For instance, providing information to boys and girls on the economic benefits of remaining in school, based on the expected wages for persons with different levels of education in Jamaica (Adelman and Haimovich 2018). It is also important to eliminate exceptions to the legal right to return to school, provide remedial or second chance programs, and expand access to programs targeting at-risk youth. Tackle the rich-poor and urban-rural divide to ensure that no one is left behind and that the digital revolution will not exacerbate economic and geographic inequalities. Going forward, an immediate objective should be remedial training in digital skills for students along with adequate provision of network access and devices. Long-term, it is imperative to integrate digital skill building into the school curriculum from an early age for all students. Specific actions in this area also include addressing gaps in access to assets that facilitate homeschooling and telework for the poor, offering comprehensive packages that bundle life skills and business trainings for entrepreneurs. Promote equitable access to post-secondary education. Equity in access to tertiary education could be improved – particularly for the socioeconomically disadvantaged, male, and rural populations – by providing scholarships or financial support for students from low-income households accompanied by information on returns to education to promote secondary school attendance. Equally important is expanded offerings in areas JAMAICA POVERTY Policy Recommendations 66 ASSESSMENT linked to national development priorities and labor-market needs, including digital skills. The country should invest in active labor market policies, such as skills training, to increase employability in new sectors, improve matching between workers and jobs, and prepare workers for future jobs. Invest in Education Management Information Systems (EMIS) and participating in international learning assessments to support evidence-based decision-making across the education system. The data should be disaggregated and available at school and student levels. Student-level data has the potential to support, for example, the identification of students at risk of dropping out (Adelman et al. 2018). The information would enable schools to intervene with additional support, such as provision of targeted counseling, tutoring, or other programs. An upgraded and integrated system would also help improve resource allocation, triggering savings in the medium term (WBG 2021). Non-communicable diseases (NCDs) impose large economic burdens on households, particularly those at the bottom of the distribution. Jamaica’s health system can at the same time deliver cost-effective care for the poor and prevention programs that target several risk factors. Evidence suggests that programs focused on encouraging physical activity, promoting a healthy diet, and reducing the harmful use tobacco are the most effective. School-based interventions hold promise in tackling increasing rates of obesity among children and can be used to promoting a healthy lifestyle. Given the dependence on external markets and exposure to price shocks, strategies and incentives could encourage the food industry to manufacture and distribute healthier products and to include health messages in communication campaigns. Equally important, as in the case of education, is improving surveillance and monitoring. Reliable and frequent data collection on the prevalence of NCDs is important for targeting purposes and assessing the effectiveness of specific interventions. Fiscal Policy and Social Assistance as Powerful Tools to Reduce Poverty and Inequality Welfare systems will need to be adapted to meet emerging needs of an aging population, especially accounting for gaps. Jamaica stands to benefit from a youth bulge, but unfolding demographic trends are likely to translate into rapid population aging in coming decades (WBG 2023). Ex-ante disparities between Jamaican men and women in access to formal work and social protection, the surging share of aging population, the incidence of chronic diseases, and increasing female life expectancy may translate into greater risk of poverty for older women and men in the absence of adequate pension schemes. The NHF’s coverage and depth is limited and out-of-pocket spending as a share of expenditure is still high, particularly for the poorest segments of the population. The NHF could serve as an existing mechanism and institution for the government to further advance universal coverage by expanding access, particularly to the poor and vulnerable populations in rural areas. Specifically, the NHF could increase coverage to more illnesses, particularly in the context of an aging population and increased prevalence of NCDs. In terms of drug subsidies, the NHF could cover a higher percentage of cost through public funding, which would require growing its pool of revenues. Jamaica’s tax regime is complex, and room to obtain additional revenues is limited. According to the IMF (2022), the system relies on relatively high rates, a narrow base, and numerous exemptions and waivers. Despite relatively high rates, revenue is small due to the country’s high level of informality and weak tax compliance. JAMAICA POVERTY Policy Recommendations 67 ASSESSMENT In addition, the system relies on multiple instruments, including consumption taxes (general and special consumption taxes), income taxes, a stamp duty, general and customs duties, transfer taxes, property taxes, and education taxes, among others; it is also affected by numerous exemptions, incentives, and waivers. A simplification of the system could reduce the incentives for individuals and firms to remain in the informal sector, potentially increasing tax revenue (Ames et al. 2001). Moreover, a simplified tax system can help address distributional aspects, particularly if combined with improved targeting of social protection programs, including PATH – as recommended by the Social Protection Public Expenditure Review (2019). Despite progress in poverty reduction and shared prosperity, Jamaica has not successfully sustained these social gains in the face of external shocks. Targeted social assistance programs have the potential to lessen inequality and poverty, but reducing vulnerability requires other social programs, such as improving insurance and programs to manage risks. The incidence and prevalence of shocks are expected to increase, mainly because of climate change, placing additional pressure on the capacity of households to respond, cope, and adapt to shocks. JAMAICA POVERTY References 68 ASSESSMENT References Acevedo, S., LaFramboise, N., and Wong, J. 2017. Caribbean Tourism in the Global Marketplace: Trends, Drivers, and Challenges. 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JAMAICA POVERTY References 71 ASSESSMENT United Nations Children’s Fund. 2023. The State of the World’s Children 2023: For every child, vaccination. UNICEF Innocenti – Global Office of Research and Foresight, Florence, April 2023. World Bank (WBG). 2003. Jamaica: The Road to Sustained Growth, Country Economic Memorandum. Washington, DC: World Bank Group. WBG. 2004. The Road to Sustained Growth in Jamaica. World Bank Country Study. WBG. 2007. Jamaica Poverty Assessment: Breaking the Cycle of Unemployment, Vulnerability and Crime (Report 35882). World Bank, Washington, DC.: World Bank Group. WBG. 2012. Reforming Severance Pay: An International Perspective. WBG. 2015. Gender Norms and Youth Violence in Jamaica: Trends and Recommendations. Washington, D.C.: World Bank Group. WBG. 2017a. Jamaica Public Expenditure Review of the Health Sector in Jamaica. Washington, D.C.: World Bank Group. WBG. 2017b. Jamaica: Second Competitiveness and Fiscal Management Programmatic Development Policy Financing. Washington, DC: World Bank Group. WBG. 2018. Advancing Disaster Risk Finance in Jamaica. Washington, DC: World Bank Group. WBG. 2021a. The Human Capital Index 2020 Update: Human Capital in the Time of COVID-19. Washington, DC: World Bank Group. WBG. 2021b. Public Expenditure Review of the Education Sector in Jamaica (English). Washington, D.C.: World Bank Group. WBG. 2022a. Jamaica Country Private Sector Diagnostic: Creating Markets in Jamaica – Repositioning for Private Sector-led Sustainable Growth. Washington, D.C.: World Bank Group. WBG, 2022b. Jamaica Systematic Country Diagnostic: Boosting Recovery and Sustainable Economic Growth. Washington, D.C.: World Bank Group. http://documents.worldbank.org/curated/en/099602312072238168/ IDU032735ce3086cf049c80bfd00d2010304efe0 WBG. 2022c. Two Years After: Saving a Generation. Washington, D.C.: World Bank Group. WBG. 2023. Jamaica Gender Assessment. Washington D.C.: World Bank Group. https://documents1.worldbank.org/ curated/en/099154502222328619/pdf/P175282042506702e0a7d100b3087a5be64.pdf World Health Organization and Ciapponi, A. 2014. Systematic review of the link between tobacco and poverty. World Health Organization. World Health Organization. 2018. Jamaica at a glance. JAMAICA POVERTY Annexes 72 ASSESSMENT Annex 1 – Jamaica’s Poverty Measurement Methodology Jamaica was one of the first countries in the world to establish a regular survey of living conditions and to use it for poverty monitoring and policy analysis. The country’s methodology for calculating the poverty line was first developed by the Planning Institute of Jamaica (PIOJ) in 1989 with technical assistance of the World Bank. Official poverty measures have been calculated using the Jamaican Survey of Living Conditions (JSLC), an annual household survey conducted since August 1988. The JSLC was modeled after the World Bank’s Living Standards Measurement Survey. Jamaica’s official poverty measurement methodology has remained the same since it was developed in 1989. The resulting series is generally comparable over three decades. The JSLC collects data on a core group of topics, including basic demographics, household consumption, education, health, and housing. In addition, a special module is implemented periodically on a rotating basis. The JSLC sample is generally composed of about 2,700 households, but it is expanded to around 9,600 households every five years or so. The data collection is generally conducted between May and August but varies somewhat depending on the year. The welfare aggregate used for official poverty measures is the household consumption expenditure per adult equivalent. This expenditure aggregate includes food, nonfood items (fuel, household supplies, personal care, clothing, footwear, transportation, telephone, recreation), lodging expenses, health, and education expenditures. The use value of durables is not captured, and the treatment of housing rental values is not consistent across households. The adult equivalence scales for household members are defined by age and sex. No temporal price adjustments are made for different interview months. The official poverty lines are defined by area – Greater Kingston Metropolitan Area (GKMA), other urban centers (OUC), and rural areas. These poverty lines are intended to reflect spatial price differences, but they are fixed over time. The total poverty line includes a food and nonfood component. The food component is defined by the price of a normative food basket, and the extreme poverty line is the cost of the food basket only. The nonfood component is derived using the average food budget share and estimated separately for the three areas. The results put the OUC at 95.3 percent of the GKMA poverty line and rural areas at 88.7 percent. All three poverty lines are updated each survey year to account for inflation. Specifically, the weighted average of the monthly CPI based on the share of households in the survey. The same inflation adjustment is applied to all three area poverty lines (i.e., GKMA, OUC, and rural), so the ratios between them remain constant over time. The adult equivalent poverty lines in 2018 were JMD 565/day or US$7.75/day (2017 PPP) for GKMA; JMD $539/ day or US$7.38/day for OUC, and JMD $502/day or US$6.87/day for rural areas. Corresponding per capita poverty lines would be lower than the adult-equivalent poverty lines. Starting in 2018, post-stratified weights were introduced in the JSCL and used for the poverty calculations. Although not strictly comparable with previous estimates, as noted by PIOJ, the national poverty measure in 2018 with the new weights was only 0.1 percentage point lower than the estimate using the old weight. Potential modifications to consider include: shifting from an expenditure to consumption concept for the welfare aggregate, improving the consistency in the valuation of housing across observations, estimating the use value of owned durable goods, modifications to the temporal and spatial price adjustments, updating the poverty line, and use of per capita normalization. JAMAICA POVERTY Annexes 73 ASSESSMENT Annex 2 – Fiscal Incidence Analysis Table A2.1: Progressivity and marginal contributions of Jamaica’s fiscal system Size1 Poverty Concentration Kakwani Redistributive (wrt Market Reduction Coefficient Coefficient Effect2 income) Effect3 Disposable Income 0.9781 Benef. PATH 0.0024 -0.3756 0.7517 0.0017 0.0059 Benef. Poor Relief 0.0009 -0.0679 0.4439 0.0003 0.0003 Benef. JADEP 0.0003 0.1955 0.1806 0.0001 0.0001 Benef. School Feeding Programme 0.0066 -0.2708 0.6469 0.0042 0.0083 All direct transfers excl contributory pensions 0.0102 -0.2624 0.6385 0.0064 0.0121 Income tax -0.0159 0.8079 0.4318 0.0068 0.0000 Education tax -0.0083 0.5525 0.1765 0.0014 -0.0005 Property tax -0.0025 0.4865 0.1104 0.0003 -0.0008 NIS contribution -0.0054 0.4294 0.0533 0.0003 -0.0005 All direct taxes -0.0268 0.6984 0.3223 0.0085 -0.0008 Consumable Income 0.8891 Benef. PATH 0.0024 -0.3756 0.7517 0.0019 0.0077 Benef. Poor Relief 0.0009 -0.0679 0.4439 0.0004 0.0005 Benef. JADEP 0.0003 0.1955 0.1806 0.0001 0.0008 Benef. School Feeding Programme 0.0066 -0.2708 0.6469 0.0046 0.0109 All direct transfers excl contributory pensions 0.0102 -0.2624 0.6385 0.0070 0.0167 Income tax -0.0159 0.8079 0.4318 0.0075 0.0000 Education tax -0.0083 0.5525 0.1765 0.0016 -0.0004 Property tax -0.0025 0.4865 0.1104 0.0003 -0.0001 NIS contribution -0.0054 0.4294 0.0533 0.0003 -0.0004 All direct taxes -0.0268 0.6984 0.3223 0.0094 -0.0005 Value-added tax contribution -0.0889 0.3941 0.0181 0.0031 -0.0361 All indirect taxes -0.0889 0.3941 0.0181 0.0031 -0.0361 All taxes -0.1157 0.4645 0.0884 0.0116 -0.0369 Final Income 0.9034 All Direct taxes -0.0268 0.6984 0.3223 0.0095 -0.0031 All Direct transfers excl contributory pensions 0.0102 -0.2624 0.6385 0.0067 0.0187 All Indirect taxes -0.0889 0.3941 0.0181 0.0036 -0.0318 All Indirect subsidies -- --- -- -- -- Benef. National Health Fund (NHF) 0.0047 0.1447 0.2314 0.0010 0.0063 Net health transfers 0.0047 0.1447 0.2314 0.0010 0.0063 Benef. Tuition Assist. Subsidies 0.0096 -0.1682 0.5443 0.0054 0.0150 Net education transfers 0.0096 -0.1682 0.5443 0.0054 0.0150 All net in-kind transfers 0.0143 -0.0659 0.4420 0.0064 0.0186 Source: WB staff estimates using JSLC (2018) Note: (1) Size equals the ratio of the amount collected or spent divided by market income. (2) Redistributive effect (marginal contribution) equals the difference between market income Gini and the relevant ending income concept Gini. (3) Poverty effect (marginal contribution) equals the difference between the Gini coefficient of the relevant ending income concept without the intervention in question and the Gini coefficient of the relevant ending income concept (which, of course, includes that intervention). By definition, the sum of the marginal contributions does not fulfill the adding-up principle, so it will not be equal to the redistributive effect unless by coincidence. The marginal contribution shown above is measured in Gini points. (4) All taxes, contributions, transfers and indicators are calculated at the household level and expressed in terms of adult equivalents (in line with Jamaica official poverty estimates). JAMAICA POVERTY Annexes 74 ASSESSMENT Table A2.2: Definition of CEQ concepts CEQ concept Definition As income data are not available in the JSLC, per capita consumption expenditure is assumed to equal disposable Disposable income income. Disposable income minus indirect taxes. The exempt items are subject to a VAT component that is “hidden” in their Consumable price, because they are produced using non-exempt (taxed) goods as inputs. This component is included in the income analysis and calculated using information from the input-output matrix and applying a cost-push model. Consumable income plus in-kind transfers. The analysis includes two in-kind transfers: the National Health Fund Final income (NHF) and the Tuition and Examination Subsidies. Disposable income minus direct transfers. Direct transfers included in the analysis are the following: the Net market income Programme of Advancement Through Health and Education (PATH), the Poor Relief, School Feeding Programme, and the Jamaica Drugs for the Elderly (JADEP). Disposable income plus direct taxes and non-pension contributions. Direct taxes and personal contributions Gross income included in the analysis are personal income tax, education tax and contributions to the National Insurance Scheme (NIS). Table A2.3: Main social assistance programs and subsidies in Jamaica Program Description Jamaica’s main social assistance program, managed by the Ministry of Labour and Social Security (MLSS). PATH introduced a conditional cash transfer program in 2002 to replace three major income support programs that Programme of provided cash or in-kind assistance. PATH’s objectives are to increase educational attainment and improve health Advancement outcomes of poor children and break the intergenerational cycle of poverty; to alleviate poverty; to reduce child Through Health labor by requiring children to attend school; and to serve as a safety net by preventing families from falling further and Education into poverty in the event of an adverse shock. (PATH) PATH targets poor families with children under 17 years, adults older than 60 years, people with disabilities, pregnant and/or lactating women, and/or unemployed adults between 18 and 64 years. The targeting consists of a proxy means test for poor families using information in the Beneficiary Identification System (BIS). One of the largest social assistance programs in Jamaica in terms of coverage, managed by School Feeding Unit School Feeding of the Ministry of Education, Youth and Information. The program aims to foster regular school attendance and Programme provide nutrition support in the form of meals, primarily for PATH beneficiary school-aged children. The program accounts for 1.21 percent of non-debt government expenditure in 2018/2019. Social program aimed at providing a stable, physical, and spiritual environment for adults living in poverty, destitute, elderly indigent, and to people who are made destitute because of fire, flood, hurricane, or drought via Poor relief the disaster relief department. It comprises three programs, namely, the Outdoor Poor Relief, Indoor Poor Relief, and Assistance to the Homeless. The program accounts for 0.20 percent of non-debt government expenditure in 2018/19. The program, managed by the Ministry of Health, facilitates access to essential drugs through payment subsidies. Jamaica Drugs for It provides a 100 percent subsidy for specific drugs covering 10 chronic illnesses for all residents of Jamaica over the Elderly (JADEP) the age of 60. The cardholder pays a fee to the pharmacy for dispensing the drugs. The program accounts for 0.07 percent of non-debt government expenditure in 2018/19. Agency that provides financial support to the national healthcare system with the aim of improving its National Health effectiveness and the affordability of healthcare for the Jamaican population. The program accounts for 1 percent Fund (NHF) of non-debt government expenditure in 2018/19. JAMAICA POVERTY Annexes 75 ASSESSMENT Annex 3 – Additional Figures and Tables Figure A3.1: Poverty rate at national poverty line, Figure A3.2: Distribution of real expenditure per 1990 – 2021 adult equivalent in 2013, 2019, and 2021. 60 .8 National 50 Rural .6 40 Poverty rate (%) Urban kdensity 30 .4 20 .2 10 0 0 8 10 12 14 16 2021* 1990 1995 2000 2005 2010 2015 log (consumption per adult equivalent) 2013 2019 2021 Source: PIOJ and WB staff estimates using JSLC. Note: 2020 estimates Source: WB staff estimates using JSLC are missing as JSLC was not fielded in 2020 due to COVID-19. Table A3.1: Poverty measures by area, region, and parish 2018 Poverty Rate Poverty Depth Poverty Share of Poor Population s.e. s.e. s.e. (%) (%) Severity (%) Share (%) Area GKMA 9.2 1.7 2.6 0.5 1.0 0.2 19.9 27.4 Other Urban 12.0 2.1 3.1 0.6 1.2 0.2 24.4 25.7 Rural 15.0 1.4 3.4 0.4 1.3 0.2 55.7 46.9 Region and Urban/Rural Eastern - Urban 11.5 2.0 3.3 0.6 1.3 0.3 20.9 23.0 Eastern - Rural 14.0 3.3 3.3 1.2 1.5 0.8 9.1 8.2 Central - Urban 10.2 2.3 2.7 0.7 1.0 0.2 18.3 22.8 Central - Rural 15.1 2.1 3.2 0.5 1.0 0.2 27.3 23.0 Western - Urban 8.7 2.1 2.0 0.6 0.8 0.3 5.0 7.3 Western - Rural 15.5 2.2 3.7 0.6 1.4 0.3 19.3 15.8 Parish Kingston 18.3 3.5 5.7 1.4 2.5 0.8 4.9 3.4 St. Andrew 10.9 2.3 3.0 0.8 1.2 0.4 18.3 21.2 St. Thomas 14.0 3.7 3.7 1.0 1.3 0.4 3.9 3.5 Portland 12.2 4.6 2.1 1.0 1.0 0.8 2.9 3.1 St. Mary 12.3 2.5 3.5 0.9 1.5 0.5 4.1 4.2 St. Ann 20.9 3.8 4.7 1.1 1.5 0.4 10.6 6.4 Trelawny 20.3 4.8 5.5 1.6 1.9 0.7 4.5 2.8 St. James 11.5 2.5 1.5 0.4 0.5 0.2 6.1 6.7 Hanover 14.4 4.6 4.9 1.6 2.5 0.8 2.9 2.6 Westmoreland 5.9 2.1 1.2 0.6 0.4 0.3 2.5 5.3 St. Elizabeth 18.7 5.0 5.1 1.5 2.0 0.6 8.3 5.6 Manchester 9.2 2.5 2.1 0.7 0.9 0.4 5.1 7.1 Clarendon 17.3 2.9 4.3 0.8 1.6 0.3 12.4 9.1 St. Catherine 9.0 3.2 1.9 0.8 0.6 0.3 13.4 19.0 Jamaica 12.6 1.0 3.1 0.3 1.2 0.1 100.0 100.0 Source: WB staff estimates using JSLC (2018) JAMAICA POVERTY Annexes 76 ASSESSMENT Table A3.2: Poverty measures by area and region 2021 Poverty Rate (%) s.e. Poverty Depth (%) s.e. Share of Poor (%) Population Share (%) Area GKMA 10.4 2.0 2.7 0.6 21.3 34.1 Other Urban 15.5 2.4 4.5 0.9 20.1 21.7 Rural 22.1 2.8 5.7 1.1 58.6 44.3 Country and Urban/Rural Western - Urban 11.9 2.4 2.9 0.7 17.0 23.8 Western - Rural 8.1 2.6 1.5 0.5 3.4 6.9 Central - Urban 12.3 2.3 3.9 0.9 18.3 24.7 Central - Rural 22.7 3.2 6.0 1.1 28.7 21.0 Eastern - Urban 14.2 3.8 3.4 1.3 6.2 7.2 Eastern - Rural 27.1 5.9 7.3 2.6 26.5 16.3 Jamaica 16.7 1.6 4.4 0.6 100.0 100.0 Source: WB staff estimates using JSLC (2021) Figure A3.3: Share of jobs by informal and formal Figure A3.4: Number of jobs by informal and formal sectors, 2018-2021 sectors, 2018-2021 100% 1,400,000 90% 1,200,000 80% 45 46 44 44 Share of employment 70% 1,000,000 546,900 580,400 547,400 514,600 Number jobs 60% 800,000 50% 16 15 16 16 40% 600,000 194,900 188,500 191,800 189,100 30% 400,000 20% 39 38 39 40 477,200 479,500 453,500 495,600 10% 200,000 0% - 2018 2019 2020 2021 2018 2019 2020 2021 Informal-Nonagriculture Informal-Agriculture Formal-Nonagriculture Informal-Nonagriculture Informal-Agriculture Formal-Nonagriculture Source: WB staff estimates; STATIN 2020, 2022 Source: STATIN 2020, 2022 Figure A3.5: Share of nonagricultural jobs by age Figure A3.6: Share of nonagricultural jobs by area group and informal/ formal sectors, 2021 and informal/ formal sectors, 2021 50 20 45 Share of nonagricultural jobs 40 15 35 30 10 25 20 5 15 10 0 5 0 14-19 20-24 25-34 35-44 45-54 55-64 65+ GKMA Other urban Rural Formal Informal Formal Informal Source: WB staff estimates; STATIN 2022 Source: WB staff estimates; STATIN 2022 JAMAICA POVERTY Annexes 77 ASSESSMENT Figure A3.7: Remittance inflow growth (constant LCU), 2001-2022 20 15 10 5 0 -5 -10 -15 -20 2007 2017 2001 2002 2003 2004 2005 2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022 Source: Staff calculations based on WDI (remittances, exchange rate, and inflation) Figure A3.8: Population share benefiting from Figure A3.9: Population share benefiting from international remittances by quintile, 2013-2021 domestic private transfers by quintile, 2013-2021 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 2013 2015 2017 2019 2021 2013 2015 2017 2019 2021 Q1 (poorest) Q2 Top 60 Q1 (poorest) Q2 Top 60 Source: WB staff estimates using JSLC Source: WB staff estimates using JSLC Figure A3.10: Remittances, average amount by Figure A3.11: Private domestic transfers, average quintile as share of the poverty line, 2013-2021 amount by quintile as share of the poverty line, 2013- 2021 120 120 100 100 % of poverty line % of poverty line 80 80 60 60 40 40 20 20 0 0 2013 2014 2015 2016 2017 2018 2021 2013 2014 2015 2016 2017 2018 2021 Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Q1 (poorest) Q2 Q3 Q4 Q5 (richest) Source: WB staff estimates using JSLC Source: WB staff estimates using JSLC JAMAICA POVERTY Annexes 78 ASSESSMENT Table A3.3: Poverty Measures by Household Characteristics, 2021 Poverty Poverty Poverty Number Share of Population 2021 s.e. s.e. s.e. Population Rate (%) Depth (%) Severity of Poor Poor (%) Share (%) Jamaica 16.7 1.6 4.4 0.6 1.8 0.3 455,446 2,732,537 100.0 100.0 Rural 22.1 2.8 5.7 1.1 2.2 0.6 266,922 1,210,391 58.6 44.3 Urban 12.4 1.5 3.4 0.5 1.5 0.3 188,525 1,522,146 41.4 55.7 GKMA 10.4 2.0 2.7 0.6 1.2 0.4 96,926 930,514 21.3 34.1 Other Urban 15.5 2.4 4.5 0.9 2.0 0.5 91,598 591,632 20.1 21.7 Household Size 1-2 persons 6.3 1.0 1.7 0.3 0.8 0.2 44,156 702,009 9.7 25.7 3-4 persons 10.2 1.5 2.8 0.6 1.3 0.4 104,714 1,023,387 23.0 37.5 5-6 persons 23.3 3.3 5.8 1.2 2.4 0.7 154,898 663,592 34.0 24.3 7 or more 44.2 5.7 12.2 2.0 4.5 0.9 151,678 343,549 33.3 12.6 Sex of Head of Household Female 19.4 2.0 5.0 0.7 2.1 0.4 262,812 1,354,256 57.7 49.6 Male 14.0 1.9 3.9 0.7 1.6 0.3 192,634 1,378,281 42.3 50.4 Age of Head 16-29 years 8.2 2.8 2.0 0.9 0.8 0.4 16,664 203,520 3.7 7.4 30-39 years 9.3 2.4 2.7 0.8 1.1 0.4 37,184 399,894 8.2 14.6 40-49 years 14.8 2.2 4.2 0.9 2.0 0.6 97,773 659,608 21.5 24.1 50-59 years 18.9 2.5 5.0 0.9 2.3 0.5 120,787 640,520 26.5 23.4 70+ years 22.1 3.1 5.6 1.0 1.9 0.4 183,039 828,994 40.2 30.3 Marital Status of Head Married 17.2 2.5 4.3 0.8 1.7 0.4 141,540 824,238 31.1 30.2 Never married 17.3 2.0 4.8 0.8 2.1 0.4 266,669 1,540,299 58.6 56.4 Divorced 6.6 3.4 1.6 0.9 0.4 0.3 5,504 83,606 1.2 3.1 Separated 18.5 8.8 6.1 3.3 2.3 1.4 10,530 56,844 2.3 2.1 Widowed 13.7 3.9 3.3 1.3 1.2 0.6 31,203 227,550 6.9 8.3 Education of Head Primary or less 28.6 5.1 8.3 2.0 3.3 1.0 90,273 315,245 19.8 11.5 Some secondary 24.4 2.4 6.3 0.9 2.5 0.4 264,948 1,084,355 58.2 39.7 Secondary (completed) 9.0 1.8 2.2 0.6 1.0 0.4 60,786 678,744 13.3 24.8 HEART (vocational) 8.2 2.6 2.3 0.9 1.0 0.5 20,441 249,787 4.5 9.1 University 6.2 3.8 2.4 2.1 1.7 1.7 1,722 27,944 0.4 1.0 JFLL / adult literacy 4.6 1.5 1.5 0.6 0.8 0.4 17,275 376,056 3.8 13.8 missing 0.0 0.0 0.0 0.0 0.0 0.0 - 407 0.0 0.0 Occupation of Head Professional, Manager, Technician 8.4 2.2 2.6 0.8 1.3 0.5 35,474 421,121 7.8 15.4 Clerk, Service/Sales Worker 9.0 2.3 1.6 0.6 0.5 0.3 40,699 454,631 8.9 16.6 Skilled Agricutural Worker 30.9 4.7 9.1 2.2 3.8 1.2 123,422 399,350 27.1 14.6 Craft/Trades Worker 7.6 2.1 2.4 0.8 1.0 0.4 31,719 419,631 7.0 15.4 Elementary Occupations 18.9 4.8 4.8 1.6 2.0 0.9 46,116 243,371 10.1 8.9 Not working/missing 22.4 2.5 5.6 0.8 2.3 0.5 178,016 794,433 39.1 29.1 Sector of Employment of Head Primary 30.5 4.8 9.2 2.2 3.9 1.2 120,891 396,036 26.5 14.5 Industry 7.2 2.3 2.4 0.9 1.0 0.4 26,088 364,000 5.7 13.3 Services 10.9 1.7 2.6 0.5 1.0 0.3 129,256 1,184,643 28.4 43.4 Not working/missing 22.7 2.5 5.8 0.8 2.4 0.5 179,210 787,858 39.3 28.8 Type of Employment of Head Government employee 3.4 2.2 1.7 1.3 1.0 0.9 6,659 194,983 1.5 7.1 Private sector employee 10.0 1.9 2.2 0.6 0.8 0.3 85,854 857,214 18.9 31.4 Employer 9.7 5.4 1.5 0.8 0.2 0.2 6,356 65,611 1.4 2.4 Own account worker 21.0 2.9 6.3 1.2 2.7 0.6 177,200 845,380 38.9 30.9 Not working/missing 23.3 2.6 5.8 0.8 2.3 0.5 179,377 769,349 39.4 28.2 Source: WB staff estimates using JSLC (2021) The poverty rate, or poverty headcount ratio (FGT0), measures the proportion of the population living below the poverty line and counted as poor. Poverty depth index, also known as the poverty gap index (FGT1), is a measure that adds up the extent to which individuals in the population on average fall below the poverty line (i.e., the depth of poverty). It is the sum of the poverty gaps from the poverty line divided by the total population. It is expressed as a percentage of the poverty line. Poverty severity index, also known as the squared poverty gap index (FGT2), is a measure of the weighted sum of poverty gaps (as a proportion of the poverty line), where the weights are the proportionate poverty gaps themselves. The poverty severity index accounts for inequality among the poor, giving more weight to those farther below the poverty line. JAMAICA POVERTY Annexes 79 ASSESSMENT Table A3.4: Poverty Measures by Household Characteristics, 2018 Poverty Poverty Poverty Number of Share of Population 2018 s.e. s.e. s.e. Population Rate (%) Depth (%) Severity Poor Poor (%) Share (%) Jamaica 12.6 1.0 3.1 0.3 1.2 0.1 345,015 2,727,503 100.0 100.0 Rural 15.0 1.4 3.4 0.4 1.3 0.2 192,195 1,279,480 55.7 46.9 Urban 10.6 1.4 2.9 0.4 1.1 0.2 152,820 1,448,023 44.3 53.1 GKMA 9.2 1.7 2.6 0.5 1.0 0.2 68,509 746,216 19.9 27.4 Other Urban 12.0 2.1 3.1 0.6 1.2 0.2 84,311 701,806 24.4 25.7 Household Size 1-2 persons 5.5 0.5 1.5 0.2 0.6 0.1 37,703 687,310 10.9 25.2 3-4 persons 9.1 1.1 2.0 0.3 0.8 0.2 89,878 983,356 26.1 36.1 5-6 persons 17.7 2.1 4.6 0.6 1.7 0.3 114,273 644,829 33.1 23.6 7 or more 25.0 3.2 6.0 1.0 2.2 0.4 103,161 412,009 29.9 15.1 Sex of Head of Household Female 14.4 1.5 3.8 0.5 1.4 0.2 192,464 1,340,672 55.8 49.2 Male 11.0 1.1 2.5 0.3 1.0 0.2 152,551 1,386,831 44.2 50.8 Age of Head 16-29 years 9.9 2.6 2.4 0.7 0.9 0.3 21,281 215,033 6.2 7.9 30-39 years 10.4 1.8 2.6 0.5 0.9 0.2 49,556 476,947 14.4 17.5 40-49 years 13.9 2.0 3.0 0.5 1.1 0.2 84,597 607,515 24.5 22.3 50-59 years 11.6 1.7 2.8 0.5 1.0 0.2 74,511 640,823 21.6 23.5 70+ years 14.6 1.7 3.9 0.6 1.6 0.3 115,070 787,185 33.4 28.9 Marital Status of Head Married 11.9 1.3 2.9 0.4 1.2 0.2 99,544 837,003 28.9 30.7 Never married 13.6 1.3 3.2 0.3 1.2 0.1 211,796 1,554,175 61.4 57.0 Divorced 4.6 2.6 0.5 0.3 0.1 0.1 3,492 75,266 1.0 2.8 Separated 8.2 4.1 1.9 1.1 0.7 0.5 3,688 45,218 1.1 1.7 Widowed 12.3 3.4 4.1 1.2 1.8 0.5 26,496 215,842 7.7 7.9 Education of Head Primary or less 19.6 3.0 5.2 1.0 2.0 0.4 75,627 384,977 21.9 14.1 Some secondary 16.8 1.5 4.0 0.4 1.5 0.2 169,037 1,007,457 49.0 36.9 Secondary (completed) 10.7 1.5 2.7 0.4 1.1 0.2 82,538 773,343 23.9 28.4 HEART (vocational) 2.1 1.0 0.4 0.3 0.1 0.1 3,436 160,559 1.0 5.9 University 0.8 0.4 0.2 0.1 0.1 0.0 2,622 335,597 0.8 12.3 JFLL / adult literacy 5.0 3.8 1.9 1.6 0.8 0.8 446 8,827 0.1 0.3 missing 19.9 9.0 4.0 1.9 1.2 0.5 11,310 56,743 3.3 2.1 Occupation of Head Professional, Manager, Technician 3.1 1.0 1.1 0.4 0.5 0.2 9,890 321,963 2.9 11.8 Clerk, Service/Sales Worker 7.6 1.5 1.7 0.4 0.6 0.2 39,839 520,983 11.5 19.1 Skilled Agricutural Worker 18.6 2.3 4.4 0.7 1.6 0.4 71,692 384,455 20.8 14.1 Craft/Trades Worker 7.1 1.3 1.4 0.3 0.4 0.1 30,022 422,094 8.7 15.5 Elementary Occupations 20.3 3.7 4.3 1.0 1.4 0.4 51,526 253,414 14.9 9.3 Not working/missing 17.2 2.1 4.7 0.6 1.9 0.3 142,047 824,594 41.2 30.2 Sector of Employment of Head Primary 19.8 2.6 4.6 0.8 1.6 0.4 78,195 394,262 22.7 14.5 Industry 9.9 1.9 2.0 0.5 0.6 0.2 32,571 330,148 9.4 12.1 Services 7.8 1.0 1.8 0.3 0.6 0.1 91,671 1,178,979 26.6 43.2 Not working/missing 17.3 2.1 4.7 0.6 1.9 0.3 142,578 824,114 41.3 30.2 Type of Employment of Head Government employee 6.8 2.2 1.5 0.6 0.5 0.2 14,937 219,768 4.3 8.1 Private sector employee 9.0 1.4 2.1 0.4 0.7 0.1 71,189 792,332 20.6 29.0 Employer 4.4 3.2 0.6 0.4 0.1 0.1 1,859 42,327 0.5 1.6 Own account worker 13.4 1.3 3.1 0.4 1.1 0.2 123,666 924,455 35.8 33.9 Not working/missing 17.9 2.3 4.8 0.7 2.0 0.3 131,847 738,478 38.2 27.1 Source: WB staff estimates using JSLC (2018) JAMAICA POVERTY Annexes 80 ASSESSMENT Map A3.1: Poverty Map – Poverty rates by Map A3.2: Poverty Map – Total population living in Community, 2012 poverty by Community, 2012 Source: PIOJ and STATIN (April 2019) “Mapping Poverty Indicators” Figure A3.12: Distance to school and form of transportation, by poverty status Distance to Primary shool - By Poverty Status and School’s Sector Transportation to go to school - By Poverty Status JSLC 2018 JSLC 2018 8.7 63.3 8 60 53.5 6 41.4 40 4.6 4.6 percent km 4 3.0 21.3 2.4 20 2.0 2.1 1.9 2 12.8 1.8 3.3 1.5 0.7 0.3 0 0 Public Private Public Private Non-poor Poor Non-poor Poor Public transport Walk Private vehicle Child’s Primary school Nearest Primary school School bus Other specify Notes: How far is your child’s school from this house? (conditional on going to Primary School) and What is the distance to the nearest primary school? N = 1245 Notes: How do you usually get to school? N = 3271 of which N nonpoor = 2699 and N poor = 572 Source: World Bank based on Jamaica Survey of Living Conditions, 2018.