Jobless Growth? Okun's Law in East Asia
Was economic growth in East Asia jobless? This paper addresses this question using data from eight East Asian countries during the period between 1997 and 2011 to estimate the Okun's Law Coefficient, which captures the relationship between gro...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2012/08/16581974/jobless-growth-okuns-law-east-asia http://hdl.handle.net/10986/11994 |
| Summary: | Was economic growth in East Asia
jobless? This paper addresses this question using data from
eight East Asian countries during the period between 1997
and 2011 to estimate the Okun's Law Coefficient, which
captures the relationship between growth and employment. The
analysis suggests that growth was not jobless. However,
there is considerable variation across countries. Generally,
the effect of growth on employment tends to magnify under
more flexible hiring and firing rules. Yet even where labor
markets are more tightly regulated, economic growth affects
employment, not necessarily in the aggregate but in its
composition. There is evidence that agricultural employment
moves counter-cyclically, as opposed to non-agricultural
employment. The effect is particularly pronounced in periods
of economic crisis, suggesting that agriculture may serve as
a shock-absorber for workers laid off in the industrial
sector. Isolating non-agricultural employment reveals a
stronger relationship between growth and job creation. |
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