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The Dynamics of Job Creation and Job Destruction in an African Economy: Evidence from Ethiopia-super- †

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  • Admasu Shiferaw
  • Arjun S. Bedi

Abstract

A growing share of manufacturing in GDP and in employment is a common feature observed in successful developing countries. Manufacturing, however, has not been a major source of employment in Ethiopia and in other Sub-Saharan African countries. This paper relies on a unique census-based panel data covering the period 1996–2007 to analyse the micro-dynamics of aggregate employment changes. The analysis shows that the weak employment performance of Ethiopian manufacturing is not due to limited job creation but a consequence of simultaneous offsetting processes of job creation and destruction. We find strong evidence of intra-industry job mobility and attribute a substantial proportion of job creation and destruction to firm entry and exit. However, jobs created by small firms tend to be transitory and there has been a re-allocation of jobs from small to larger firms during periods of faster aggregate net employment growth. Overall, the evidence suggests that employment growth and job re-allocation are not necessarily restrained by labour laws and regulations. Copyright 2013 , Oxford University Press.

Suggested Citation

  • Admasu Shiferaw & Arjun S. Bedi, 2013. "The Dynamics of Job Creation and Job Destruction in an African Economy: Evidence from Ethiopia-super- †," Journal of African Economies, Centre for the Study of African Economies, vol. 22(5), pages 651-692, November.
    • Handle: RePEc:oup:jafrec:v:22:y:2013:i:5:p:651-692
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    File URL: http://hdl.handle.net/10.1093/jae/ejt006
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    Cited by:

    1. Florian Léon, 2022. "The elusive quest for high-growth firms in Africa: when other metrics of performance say nothing," Small Business Economics, Springer, vol. 58(1), pages 225-246, January.
    2. Ibrahim Mike Okumu & Patricia Naluwooza & Edward Bbaale, 2022. "Firm Dynamics, Job Creation and Job Destruction in Africa: Is the Quality of Institutional Environment Relevant?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2970-3004, December.
    3. Florian Leon, 2019. "The elusive quest for high- growth firms in Africa: The (lack of) growth persistence in Senegal," Working Papers hal-02493326, HAL.
    4. Kaku Attah Damoah & Giorgia Giovannetti & Marco Sanfilippo, 2021. "Markup Dispersion and Firm Entry: Evidence from Ethiopia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(2), pages 299-327, April.
    5. Urquía-Grande, Elena & Cano-Montero, Elisa I. & Pérez-Estébanez, Raquel & Chamizo-González, Julián, 2018. "Agriculture, nutrition and economics through training: A virtuous cycle in rural Ethiopia," Land Use Policy, Elsevier, vol. 79(C), pages 707-716.
    6. Stephen Esaku, 2022. "Which firms drive employment growth in Sub-Saharan Africa? Evidence from Kenya," Small Business Economics, Springer, vol. 59(1), pages 383-396, June.

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