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BACKGROUND PAPER FOR THE WORLD DEVELOPMENT REPORT 2013 Labor Markets, Occupational Choice, and Rural Poverty in Selected Countries in Asia and Sub-Saharan Africa Jonna P. Estudillo Tomoya Matsumoto Hayat Chowdhury Zia Uddin Nandika S. Kumanayake Keijiro Otsuka Estudillo, Matsumoto, and Otsuka are professor, associate professor, and professor, respectively, at the National Graduate Institute for Policy Studies, Uddin is staff at the Ministry of Finance in Bangladesh, and Kumanayake is staff at the Ministry of Finance in Sri Lanka. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Development Report 2013 team, the World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. - 1 - I. Introduction Poverty reduction has been an international objective since 1990 with the signing of the Millennium Development Goals (MDGs). Target 1 of the MDGs is ―to halve the proportion of people living on less than a dollar a day between 1990 and 2015 .‖ In 1990, there were 1.8 billion people in the world living on less than the newly revised poverty line of $1.25 per capita per day. This number dropped to 1.4 billion in 2005, while poverty rate dropped from 46 percent to 27 percent during 1990-2005. As a whole, the developing world appears to be on track in achieving Target 1 despite the global financial crises and food and energy crises that took place in 2008-09. It is by now well known that poverty is largely a rural phenomenon. Since rural poverty accounts for 70 percent of the aggrega