Publication: Job Creation in the Private Sector: An Exploratory Assessment of Patterns and Determinants at the Macro, Sector, and Firm Levels
Date
2017
ISSN
Published
2017
Author(s)
Abstract
Why do some countries create more jobs
than others? To consider this question, in this paper we
focus on one of the most basic relationships, between growth
and employment. In practice, the private sector responds
very differently to growth (and decline) across countries.
Understanding the patterns and drivers of private sector
decisions to expand and shed jobs may be important to guide
policy approaches for job creation. This paper analyzes the
output-employment relationship in the context of business
cycles at three levels: the macro-economy; industry (in
manufacturing); and firms. The results highlight major
differences in private sector job creation responsiveness to
growth across stages of development and economic structures,
but a critical finding is that economies (and firms) where
formal sector job creation was more responsive to growth
cycles generated more jobs overall. In addition, results
from both the macro analysis and the sectoral analysis
suggests significant complementarity between capital and
labor. Finally, the findings may help to frame a broad
policy agenda for job creation, including: macro-economic
fundamentals, responsive labor markets, access to finance,
competition, and a facilitative business regulatory
environment. These are not surprising, but nevertheless
frame a set of issues that could be explored in further research.
Citation
“Farole, Thomas; Ferro, Esteban; Michel Gutierrez, Veronica. 2017. Job Creation in the Private Sector; Job Creation in the Private Sector : An Exploratory Assessment of Patterns and Determinants at the Macro, Sector, and Firm Levels. Jobs Working Paper;No. 5. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/28370 License: CC BY 3.0 IGO.”