This report is part of an ongoingdialogue between the World Bank and Secretaria de DesarrolloSocial (SEDESOL) on poverty reduction. It builds on thefindings and messages of the World Bank poverty programmaticreports, which included a poverty assessment, detailedfollow-up analysis of urban and rural poverty, socialprotection, and poverty and decentralization. This reportresponds to a request from the SEDESOL for support inrefining its programmatic approach to poverty reduction viafurther analysis and more detailed recommendations andguidance regarding the next generation of povertyreduction/social development programs. This report is thefirst of three technical pieces agreed with SEDESOL as partof the work program on increasing the productivity of thepoor. The two remaining pieces are: a) reviewinginternational evidence and experience on selected policiesand programs; and b) developing the implication for socialdevelopment/poverty reduction policies and programs inMexico. This report begins with a short summary of mainfindings. Chapter one analyzes recent trends in urbanpoverty, with emphasis in the recovery in poverty levelsafter the mid-1990s peso crisis. Chapter two discusses thecharacteristics of the urban poor and their labor marketperformance. Chapter three reviews the legal and regulatoryenvironment and its affects on labor market performance.Chapters four to six provide assessments of selectedinterventions to improve the income and job opportunities ofthe poor, and offers suggestions that could better theirresults. The last chapter concludes and discusses areas offuture work.
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