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The Role of Sectoral Growth Patterns in Labor Market Development

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  • Arias-Vazquez, Francisco Javier

    (World Bank)

  • Lee, Jean Nahrae

    (World Bank)

  • Newhouse, David

    (World Bank)

Abstract

This paper investigates the relationship between sectoral growth patterns and employment outcomes. A broad cross-country analysis reveals that in middle-income countries, employment responds more to growth in less productive and more labor-intensive sectors. Employment in middle-income countries is susceptible to a resource curse, and grows rapidly in response to manufacturing and export manufacturing growth. Within Brazil, Indonesia, and Mexico, the effects of different sectoral growth patterns are context dependent, but differences in sectoral growth effects on employment and wages are substantially reduced in states or provinces with higher measured labor mobility. Consistent with this, aggregate employment and wage effects of growth by sector are close to uniform when examined over longer time horizons, after labor has an opportunity to adjust across sectors. The results reinforce the importance of growth in more labor-intensive sectors, and suggest that job mobility may be an important mechanism to diffuse the benefits of capital-intensive growth.

Suggested Citation

  • Arias-Vazquez, Francisco Javier & Lee, Jean Nahrae & Newhouse, David, 2012. "The Role of Sectoral Growth Patterns in Labor Market Development," IZA Discussion Papers 6926, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6926
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    Cited by:

    1. Ham Andrés & Maldonado Darío & Guzmán-Gutiérrez Carlos Santiago, 2021. "Recent trends in the youth labor market in Colombia: Diagnosis and policy challenges," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-62, January.
    2. International Monetary Fund, 2014. "Philippines: Selected Issues," IMF Staff Country Reports 2014/246, International Monetary Fund.
    3. Levin, Mark (Левин, Марк), 2018. "Research of Economic Models of Innovations Aimed at Overcoming the Deficit of Natural Resources [Исследование Экономических Моделей Инноваций, Направленных На Преодоление Дефицита Природных Ресурсо," Working Papers 021803, Russian Presidential Academy of National Economy and Public Administration.
    4. Wiggins, Steve & Keats, Sharada, 2015. "Rural Wages in Asia," 2015 Conference, August 9-14, 2015, Milan, Italy 212615, International Association of Agricultural Economists.
    5. Richter, Kaspar & Witkowski, Bartosz, 2014. "Does growth generate jobs in Eastern Europe and Central Asia ?," Policy Research Working Paper Series 6759, The World Bank.
    6. Andrés Ham & Darío Maldonado & Carlos Santiago Guzmán-Gutiérrez, 2019. "Tendencias recientes en la situación laboral de los jóvenes en Colombia: diagnóstico, desafíos y retos de política pública," Documentos de trabajo 17569, Escuela de Gobierno - Universidad de los Andes.
    7. Chacaltana, Juan, 2016. "Peru, 2002-2012: growth, structural change and formalization," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    8. Mindaugas Butkus & Laura Dargenyte-Kacilevièiene & Kristina Matuzevièiute & Janina Šeputiene & Dovile Rupliene, 2023. "Age- and Gender-specific Output-employment Relationship across Economic Sectors," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 71(1), pages 3-22, January.

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    More about this item

    Keywords

    employment; production structure; economic growth; unemployment; productivity;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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