Analyses of GDP per capita differences across countries focus almost exclusively on differences in productivity. This paper shows that there are also large differences in medium-run dynamics in the employment-to-population ratio. The paper finds a general tendency for productivity growth to be negatively correlated with changes in the employment to population ratio for a large sample of EMDEs-a phenomenon described using the term jobless development in this paper. The paper also shows that there are large differences in the steady state levels of the employment to population ratios that countries are converging to. There are also countries that experience substantial increases in their employment-to-population ratio during the development process. Using a two-stage procedure, the paper studies this issue in a large sample of EMDEs. In the first stage, the paper estimates differences in steady-state employment ratios across countries. In the second stage, it documents which institutional and policy factors are correlated with steady-state employment ratios. The paper finds particularly large differences across countries in steady-state employment ratios for women. Fewer legal protections of women's rights are associated with lower steady-state employment ratios for women, without an offsetting positive effect for men.
Authors
Ohnsorge,Franziska Lieselotte, Rogerson,Richard, Zoe Leiyu Xie
- DOI
- https://dx.doi.org/10.1596/1813-9450-10928
- Disclosure Date
- 2024/09/25
- Disclosure Status
- Disclosed
- Doc Name
- Jobless Development
- Originating Unit
- Off of Sr VP Dev Econ/Chief Econ (DECVP)
- Pages
- 39
- Published in
- United States of America
- Series Name
- Policy Research working paper; PROSPERITY;
- Unit Owning
- Office of the Chief Economist (SARCE)
- Version Type
- Final
- Volume No
- 1
Table of Contents
- 1. Introduction 4
- 2. Methodology and data 6
- 2.1 Conceptual framework 6
- 2.2 Methodology 7
- 2.2.1 First stage: Panel regression 8
- 2.2.2 First stage: Country fixed effects 8
- 2.2.3 Second stage: Cross-country regression 9
- 2.3 Data 10
- 3. First-stage regression results: Steady-state employment ratios 10
- 3.1 Correlates of annual changes in employment ratios 11
- 3.2 Steady-state employment ratios 11
- 3.3 Robustness 12
- 4. Second-stage regression results: Correlates of steady-state employment ratios 13
- 4.1 Correlates identified in the literature 13
- Openness to international trade and finance 14
- Finance for investment and technologies 14
- Product and labor market flexibility 15
- Tax regimes 16
- Policy uncertainty 16
- Land constraints 17
- Establishment size 17
- Human capital 17
- Gender-related laws 18
- 4.2 Second-stage results for aggregate steady-state employment ratios 18
- 4.3 Second-stage results for non-agricultural steady-state employment ratios 18
- 5. Conclusion and policy implications 19
- Figure 1. Evolution of employment to working-age population ratio in Korea and India 21
- Figure 2. Statistically significant deviations of steady-state employment ratios from sample average 22
- Figure 3. Deviation of steady-state employment ratios from sample average 23
- Figure 4. Deviation of women’s steady-state employment ratios from sample average 23
- Table 1. First-step regression: Fixed effects panel regression of annual changes in employment ratios 24
- Table 2. EMDEs with statistically significantly above-average or below-average employment ratios (continued) 25
- Table 2. EMDEs with statistically significantly above-average or below-average employment ratios (concluded) 26
- Table 3. Correlations with aggregate steady-state employment ratios 27
- Table 4. Robustness check: First-stage fixed effects panel regression 28
- Table 5. Robustness check: Correlation of country fixed effects across specifications 29
- Table 6. Correlations with steady-state employment ratios and country characteristics (continued) 30
- Table 6. Correlations with steady-state employment ratios and country characteristics (continued) 31
- Table 6. Correlations with steady-state employment ratios and country characteristics (concluded) 32
- References 33
