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When and for Whom Does Growth Becomes Jobless?

Author

Listed:
  • Mindaugas Butkus

    (Institute of Regional Development, Vilnius University Siauliai Academy, 76352 Siauliai, Lithuania)

  • Laura Dargenytė-Kacilevičienė

    (Institute of Regional Development, Vilnius University Siauliai Academy, 76352 Siauliai, Lithuania)

  • Kristina Matuzevičiūtė

    (Institute of Regional Development, Vilnius University Siauliai Academy, 76352 Siauliai, Lithuania)

  • Dovilė Ruplienė

    (Institute of Regional Development, Vilnius University Siauliai Academy, 76352 Siauliai, Lithuania)

  • Janina Šeputienė

    (Institute of Regional Development, Vilnius University Siauliai Academy, 76352 Siauliai, Lithuania)

Abstract

The results of previous research suggest that the elasticity of employment with respect to output is not constant within each phase of the business cycle and might depend on the maturity of that phase. Nevertheless, empirical evidence is almost non-existent. Using the unemployment gap as the proxy for the maturity of the business cycle phase, this paper seeks to determine heterogeneous elasticity across different business cycle phases. Furthermore, we aim to evaluate specific elasticities for separate demographic groups, considering gender, age, and educational attainment level, to identify the most vulnerable to jobless growth. Our specification is based on the employment version of Okun’s law, and estimates are provided for the whole EU-27 panel covering the period from 2000 to 2022. Our results suggest that elasticity is higher when the unemployment gap is positive and increasing and lower when the gap decreases, regardless of the business cycle phase. Thus, it can be argued that the possibility of growth increasing employment is very limited when the economy operates at its potential level (full employment) for all demographic groups.

Suggested Citation

  • Mindaugas Butkus & Laura Dargenytė-Kacilevičienė & Kristina Matuzevičiūtė & Dovilė Ruplienė & Janina Šeputienė, 2024. "When and for Whom Does Growth Becomes Jobless?," Economies, MDPI, vol. 12(1), pages 1-21, January.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:1:p:19-:d:1319692
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    References listed on IDEAS

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    1. K. Burggraeve & G. de Walque & H. Zimmer, 2015. "The relationship between economic growth and employment," Economic Review, National Bank of Belgium, issue i, pages 32-52, June.
    2. Elroukh, Ahmed W. & Nikolsko-Rzhevskyy, Alex & Panovska, Irina, 2020. "A look at jobless recoveries in G7 countries," Journal of Macroeconomics, Elsevier, vol. 64(C).
    3. Mindaugas Butkus & Janina Seputiene, 2019. "The Output Gap and Youth Unemployment: An Analysis Based on Okun’s Law," Economies, MDPI, vol. 7(4), pages 1-17, November.
    4. Aguiar-Conraria, Luís & Martins, Manuel M.F. & Soares, Maria Joana, 2020. "Okun’s Law across time and frequencies," Journal of Economic Dynamics and Control, Elsevier, vol. 116(C).
    5. Martus, Bettina Szandra, 2016. "Jobless Growth: the Impact of Structural Changes," Public Finance Quarterly, Corvinus University of Budapest, vol. 61(2), pages 244-264.
    6. John D. Burger & Jeremy S. Schwartz, 2018. "Jobless Recoveries: Stagnation Or Structural Change?," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 709-723, April.
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