The Role of Sectoral Growth Patterns in Labor Market Development

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.

Bibliographic Details

Main Authors:	Arias-Vazquez, Francisco Javier, Lee, Jean N., Newhouse, David
Language:	English en_US
Published:	World Bank, Washington, DC 2012-10
Subjects:	AGGREGATE EMPLOYMENT, AGGREGATE GROWTH, AGRICULTURAL GROWTH, AGRICULTURAL PRODUCTIVITY, AGRICULTURE, ANNUAL GROWTH, AVERAGE UNEMPLOYMENT, AVERAGE WAGE, COMPETITIVE PRESSURES, COUNTRY CASE, COUNTRY DATA, COUNTRY LEVEL, COUNTRY REGRESSIONS, CROSS-COUNTRY ANALYSIS, DEVELOPING COUNTRIES, DEVELOPING WORLD, DEVELOPMENT ECONOMICS, DEVELOPMENT INDICATORS, DEVELOPMENT POLICY, DEVELOPMENT REPORT, DISTRIBUTIONAL IMPLICATIONS, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC LITERATURE, ECONOMIC REFORMS, ECONOMIC RESEARCH, ECONOMIC SECTORS, ECONOMIC STRUCTURES, ECONOMIC STUDIES, ECONOMICS, ELASTICITY, EMPLOYEE, EMPLOYMENT, EMPLOYMENT EFFECTS, EMPLOYMENT GENERATION, EMPLOYMENT GROWTH, EMPLOYMENT INCREASE, EMPLOYMENT OUTCOME, EMPLOYMENT OUTCOMES, EMPLOYMENT PATTERNS, EMPLOYMENT PROTECTION LEGISLATION, EMPLOYMENT STATUS, EMPLOYMENT TRENDS, EXCHANGE RATES, EXPORT GROWTH, EXPORTS, FINANCIAL CRISIS, FINANCIAL SECTOR, FINANCIAL SECTORS, FINANCIAL SERVICES, FIXED EFFECTS, GDP, GDP PER CAPITA, GLOBAL ECONOMY, GROSS DOMESTIC PRODUCT, GROWTH PRO-POOR, GROWTH RATE, GROWTH RATES, HIGH INCOME COUNTRIES, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HUMAN DEVELOPMENT, INCOME, INCOME DISTRIBUTION, INCOME INEQUALITY, INDUSTRIAL DEVELOPMENT, INDUSTRIALIZATION, JOB CREATION, JOBS, LABOR ALLOCATION, LABOR FORCE, LABOR MARKET, LABOR MARKET DEVELOPMENT, LABOR MARKET INDICATORS, LABOR MARKET OUTCOMES, LABOR MARKET RIGIDITIES, LABOR MARKETS, LABOR MOBILITY, LABOR PRODUCTIVITY, LABOR PRODUCTIVITY GROWTH, LABOR REGULATION, LABOR REGULATIONS, LABOUR, LABOUR FORCE, LAWS, LIVING STANDARDS, LOCAL LABOR MARKETS, LONG RUN, LONG-RUN EFFECTS, LONG-RUN GROWTH, LOW-INCOME COUNTRIES, MACROECONOMICS, MIDDLE INCOME COUNTRIES, MIDDLE INCOME COUNTRY, NATURAL RESOURCES, NON-FARM SECTOR, OCCUPATION, OCCUPATIONS, OPEN UNEMPLOYMENT, PANEL REGRESSIONS, POINT DECLINE, POINT ESTIMATE, POINT ESTIMATES, POLICY OBJECTIVE, POLICY RESEARCH, POSITIVE EFFECTS, POVERTY DYNAMICS, POVERTY REDUCTION, POVERTY REDUCTION STRATEGIES, PREVIOUS SECTION, PREVIOUS STUDIES, PRO-POOR, PRODUCTIVE EMPLOYMENT, PRODUCTIVITY, PRODUCTIVITY GROWTH, PRODUCTIVITY IMPROVEMENTS, PRODUCTIVITY INCREASES, PUBLIC SECTOR, REAL WAGE, REAL WAGE DECLINES, REDUCING POVERTY, RETAIL TRADE, RURAL AREAS, SAVINGS, SECTORAL COMPOSITION, SERVICE SECTOR, SIGNIFICANT EFFECT, SOCIAL PROTECTION, SOCIAL SERVICES, STANDARD DEVIATION, STRUCTURAL CHANGE, TRANSPORT, UNEMPLOYED, UNEMPLOYMENT, UNEMPLOYMENT DECLINE, UNEMPLOYMENT RATE, UNEMPLOYMENT RATES, URBAN AREAS, URBAN WORKERS, VALUE ADDED, WAGE DATA, WAGE EFFECTS, WAGE EMPLOYMENT, WAGE GROWTH, WAGE INCREASES, WAGES, WEALTH, WORK FORCE, WORKER,
Online Access:	http://documents.worldbank.org/curated/en/2012/10/16876453/role-sectoral-growth-patterns-labor-market-development https://hdl.handle.net/10986/12093
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