The employment elasticity of economic growth - A global study of trends and determinants for the years 2000-2017.

Abstract

In this paper, the employment elasticity of economic growth is calculated for 168 countries globally. The employment elasticity refers to the percentage change in employment associated with a 1% increase in GDP. Therefore, the higher the employment elasticity, the more labor-intensive growth. In order to evaluate trends across different demographic groups, the elasticity is measured for each country’s population, and also for the subgroups adult, youth, female, male, female youth, male youth, female adult, and male adult. The results are then analyzed on a country, regional level and global level. Comparisons are also made across developed and developing countries. Finally, an econometric model is used to find possible determinants of the employment elasticity measure. The results vary greatly across countries. The highest and lowest recorded country elasticity was -0.32 and 2.61 respectively. On a regional level, the most employment intensive growths were recorded for the Caribbean, Central America and Southern Europe. The elasticity was higher for developing countries compared to developed. It was also clear that there was a greater gender difference in developed countries. For the majority of observed regions, the highest elasticity measure was recorded for female adults followed by adults. Labor force growth, Share of total employment in the service sector, Share of total employment in the industry sector, FDI and trade were all shown to have an impact on the employment elasticity measure, at least for some demographic groups.