Cristina Batog, Ernesto Crivelli, Ms. Anna Ilyina, Zoltan Jakab, Mr. Jaewoo Lee, Anvar Musayev, Iva Petrova, Mr. Alasdair Scott, Ms. Anna Shabunina, Andreas Tudyka, Xin Cindy Xu, and Ruifeng Zhang
The populations of Central and Eastern European (CESEE) countries—with the exception of Turkey—are expected to decrease significantly over the next 30 years, driven by low or negative net birth rates and outward migration. These changes will have significant implications for growth, living standards and fiscal sustainability.
Zidong An, Tayeb Ghazi, Nathalie Gonzalez Prieto, and Mr. Aomar Ibourk
This paper investigates the relationship between economic growth and job creation in developing economies with a focus on low and lower middle-income countries along two dimensions: growth patterns and short-run correlations. Analysis on growth patterns shows that regime changes are quite common in both economic growth and employment growth, yet they are not synchronized with each other. Okun’s Law—the short-run relationship between output and labor market—holds in half of the countries in our sample and shows considerable cross-country heterogeneity.
Mr. Ralph Chami, Ekkehard Ernst, Connel Fullenkamp, and Anne Oeking
We present cross-country evidence on the impact of remittances on labor market outcomes.
Remittances appear to have a strong impact on both labor supply and labor demand in
recipient countries. These effects are highly significant and greater in size than those of
foreign direct investment or offcial development aid. On the supply side, remittances reduce
labor force participation and increase informality of the labor market. In addition, male and
female labor supply show significantly different sensitivities to remittances. On the demand
side, remittances reduce overall unemployment but benefit mostly lower-wage, lowerproductivity
nontradables industries at the expense of high-productivity, high-wage tradables
sectors. As a consequence, even though inequality declines as a result of larger remittances,
average wage and productivity growth declines, the latter more strongly than the former
leading to an increase in the labor income share. In fragile states, in contrast, remittances
impose a positive externality, possibly because the tradables sector tends to be
underdeveloped. Our findings indicate that reforms to foster inclusive growth need to take
into account the role of remittances in order to be successful.
The composition of short-term and medium-term adjustment measures will facilitate sufficient short-term adjustment flexibility, and be consistent with medium-term fiscal sustainability. Improving debt resolution instruments will help the banks to regain confidence in lending. Meanwhile, there is a need to consider improvements in its liquidity framework. The main factors that shaped the economic growth model in Moldova in the last decade and the risks of the current growth model are outlined. Public policies can promote growth by identifying and addressing the most binding constraints to development.