World Bank Study Reveals Why Self-Employment Beats Salaried Jobs in Fighting Global Poverty

A World Bank study covering 41 countries finds that self-employment can be more effective in helping families escape poverty in poorer economies, while salaried jobs become increasingly important as countries develop. The research highlights women's employment, productive job opportunities and country-specific policies as essential to reducing poverty and protecting vulnerable households from economic hardship.

A major study by researchers from the World Bank's Development Data Group, Development Economics, Fiscal Policy and Growth Global Department, and the Inter-American Development Bank challenges the belief that salaried employment is always the best way to escape poverty. Published in October 2026, the research paper One Ladder Does Not Fit All: Jobs and Poverty Transitions Across the Globe, authored by Maurizio Bussolo, Iván Torre and Hernan Winkler, examines how different types of employment affect household living standards. Using data from 191,627 households across 41 countries, representing 52.9% of the world's population and 55.3% of global employment, the study finds that self-employment can be as important as salaried jobs in reducing poverty in poorer countries. In contrast, wage employment becomes increasingly valuable as economies develop.

The findings challenge conventional employment policies that prioritize formal jobs without considering local economic conditions. Researchers examined how households move into and out of poverty through changes in wage employment, agricultural work, non-agricultural self-employment and business ownership. The results suggest that governments need different strategies depending on their country's income level, labour-market structure and opportunities available to workers.

Why Self-Employment Can Beat Salaried Jobs in Poor Countries

The research reveals striking differences in how employment affects poverty across income groups. In low-income countries, moving into non-agricultural self-employment is associated with a 17.7-percentage-point higher probability of escaping poverty, compared with 13.2 points for wage employment. This suggests that small businesses, independent trading and other non-farm activities can offer valuable opportunities where regular salaried jobs are limited.

The situation changes as economies become wealthier. In upper-middle-income countries, wage employment is associated with a 23.9-percentage-point increase in poverty-exit probability, compared with 7.4 points for non-agricultural self-employment. In high-income countries, wage employment remains strongly associated with escaping poverty, at 21.2 percentage points, while self-employment shows no statistically significant relationship.

Across the overall sample, moving one working-age household member into wage employment is associated with approximately 18% higher per capita welfare, compared with around 8% for non-agricultural self-employment. The findings indicate that employment policies should reflect the economic opportunities available in different countries rather than follow a universal model.

Agriculture, Informal Work and the Changing Face of Poverty

Agriculture remains the main source of livelihood for many poor households in developing economies. In low-income countries, approximately 60% of working-age members in the poorest households are engaged in agricultural self-employment, while only around 6% hold wage jobs. This demonstrates that poverty often results from low earnings rather than a complete absence of work.

As countries develop, employment patterns change considerably. In upper-middle-income economies, approximately 46% of working-age members in the poorest households are not employed. In high-income countries, wage employment accounts for around 34% of working-age members among the poorest households, rising to nearly 75% among the richest.

The study also finds that agricultural self-employment becomes less beneficial as economies grow wealthier. In upper-middle- and high-income countries, transitions into agricultural self-employment are associated with declining welfare. These findings highlight the importance of improving agricultural productivity, expanding non-farm opportunities and supporting workers moving into better-paying activities.

Jobs Protect Families From Poverty, but Women Play a Bigger Role Than Expected

One of the study's most important findings is that escaping poverty and avoiding poverty require different employment conditions. While better-paying jobs are more strongly associated with escaping poverty, almost any form of employment can help protect households from economic hardship.

Across the pooled sample, transitions into wage employment are associated with a 9.3-percentage-point reduction in the probability of falling into poverty. Employer status is associated with a 7.5-point reduction, while non-agricultural self-employment is linked to a 6.3-point reduction.

Women's employment also emerges as a powerful factor in household economic security. In low-income countries, women's transitions into wage employment are associated with a 16.3-percentage-point higher probability of escaping poverty, compared with a statistically insignificant 9.4-point estimate for men.

In high-income economies, the corresponding figures are 24.5 percentage points for women and 17.2 points for men. Middle-income countries show stronger associations for men's employment transitions, reflecting differences in labour-market participation and household earning patterns.

What Governments and Development Partners Must Do Differently

The findings carry important implications for governments, international development institutions and private-sector stakeholders. In poorer economies, policymakers should consider strengthening small enterprises, improving access to productive self-employment and supporting non-agricultural businesses alongside formal job creation.

In middle- and high-income countries, expanding access to quality salaried employment may be more closely aligned with poverty reduction. Governments should also distinguish between helping households escape poverty and preventing vulnerable families from falling into it.

For development partners, the research highlights the need for country-specific employment programmes rather than standardized interventions. Social protection, women's economic participation and opportunities to improve household earnings can complement employment policies.

The researchers caution that the findings establish statistical relationships rather than direct causal effects. Nevertheless, the central message is clear: reducing poverty requires more than creating jobs. It requires understanding which employment opportunities improve household living standards, how those opportunities change with economic development and how governments can help families build more secure livelihoods.