Working Paper   76

Impact of the Global Financial Crisis on the Rural Labour Market: Evidence from Nine Villages in Cambodia

Author(s): HING Vutha

Published: 01-Mar-2013
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Abstract/Summary

This report presents new work on the impacts of the global financial crisis on the rural labour market in Cambodia. The analysis uses a combination of descriptive statistics and econometric modelling with data from household surveys in nine rural villages to track labour market changes before, during and after the crisis and then assesses the magnitude of associated impacts. The study produces a number of interesting findings.

Perhaps the most important result was that, because of the global financial crisis, employment participation in rural Cambodia increased; the employment structure shifted towards agriculture and informal sectors; real wages decreased; and migration reversed from overseas and urban areas to rural villages. In other words, the crisis put pressure on many households to involve more family members in income earning. This situation, an increasing supply of labour with constant or declining demand, put downward pressure on real wages and caused incomes to fall.

Second, the rural labour market is the last resort for returning migrants and laid-off urban workers in difficult economic times. This could also imply that rural areas served as a safety net for a highly vulnerable workforce affected by the crisis.

Third, although the analysis hasn’t been able to use full panel data due to the fact that the survey in 2009 involved 90 households, the report makes a significant contribution to existing case study literature on the global financial crisis and its impacts on Cambodia’s rural labour market, especially via using quantitative household data. 




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