Center for Mediterranean Integration, 2012, Transforming Arab Economies: Travelling the Knowledge and Innovation Road (Washington: World Bank and CMI).
Crivelli, E., D. Furceri, and J. Toujas-Bernate, 2012, “Can Policies Affect Employment Intensity of Growth? A Cross-Country Analysis,” IMF Working Paper 12/218 (Washington: International Monetary Fund).
Islam, I., and S. Nazara, 2000, “Estimating Employment Elasticity for the Indonesian Economy,” Technical Note on the Indonesian Labor Market (Geneva: International Labor Organization).
Kapsos, S., 2005, “The Employment Intensity of Growth: Trends and Macroeconomic Determinants,” ILO Employment Strategy Paper (Geneva: International Labor Organization).
Lagarde, C., 2012, “Seizing the Moment—Thinking Beyond the Crisis,” address at the Brookings Institution, Washington DC, April 12.
Loungani, P. and R. Salgado, 2012, “Jobs and Growth Working Group: Progress Report, Memorandum to Management,” May 1. (Washington: International Monetary Fund)
World Bank, 2011, “Investing for Growth and Jobs,” Middle East and North Africa Economic Developments and Prospects (Washington: World Bank).
World Bank, 2012, “Bread, Freedom, and Dignity: Jobs in the Middle East and North Africa,” MENA Regional Flagship (Washington: World Bank).
The relevant files are available at http://www.imf.org/external/pubs/ft/tnm/2012/data/tnm1201.zip or upon request from Paul Zimand (email: firstname.lastname@example.org; ext. 36672).
Article I of the IMF’s Articles of Agreement lists “the promotion and maintenance of high levels of employment and income” among the direct purposes of the institution (emphasis added).
For example, this would include the International Labor Organization (ILO) and the World Bank.
Within MCD, three-quarters of country teams have already used the template or are in the process of integrating it into their surveillance work. For many countries in MCD, unemployment rates are among the highest in the world and this is seen as perhaps the most important structural challenge facing the region.
This exercise can be replicated using other econometrics packages.
Access to EcOS is limited to IMF staff. External researchers can use the WEO database to populate the template.
As part of a broader collaborative effort, the IMF is working to establish automatic links to ILO databases and to make them available to internal users only, through its document management system, DMX.
The four indicators used in the template are closely related. The ILO labor force series and the IMF employment series both use UN population data as inputs, and the labor force series uses WEO GDP growth rates for its projections.
Islam and Nazara (2000) express concern with using arc elasticities instead of point elasticities for policy advice. Many studies, for example by the World Bank (2011, 2012), draw on the ILO’s Key Indicator of the Labor Market No. 19, or “KILM 19,” found at http://kilm.ilo.org/KILMnetBeta/pdf/kilm19EN-2009.pdf. This measure is estimated for individual countries over very short time periods. Furthermore, the series has been discontinued since the seventh edition, which means elasticities will not be available in the future, and recent elasticities will not be updated after revisions to employment and GDP figures. Other studies do sometimes use longer time periods of a decade or so, for example Kapsos (2005), also of the ILO, and the Center for Mediterranean Integration (2012). While these studies make important contributions, they do not allow for trend terms or lags in the specifications, which can lead to estimation bias and other sources of errors in forecasting labor market outcomes. Moreover, they use the identical method for all countries without taking into account specific features of each country’s economy or labor market.
This draws on Cahuc and Zylberberg (2004). Depending on the structure of the product market—for example, the degree of pricing power—additional restrictions on φ and α may be needed to satisfy second-order conditions for profit maximization. For conditional factor demand with Y given, αφ < 1 applies.
Under the technological assumptions made so far, one can infer TFP growth from the employment elasticity. For example, it is straightforward to show that Δln(A) = (1 – ε) * Δln(Y). Alternatively, assumptions can be relaxed and substituted with a growth accounting method.
This abstracts from sector-specific technical progress.