Fewer Jobs or Smaller Paychecks? Aggregate Crisis Impacts in Selected Middle-Income Countries
AbstractThis paper reviews evidence from 44 middle income countries on how the recent financial crisis affected jobs and workers' income. In addition to providing a rare assessment of the magnitude of the impact across several middle-income countries, the paper describes how labor markets adjusted and how the adjustments varied for different types of countries. The main finding is that the crisis affected the quality of employment more than the number of jobs. Overall, the slow-down in earning growth was considerably higher than that in employment, and the decline in GDP was associated with a sharp decline in output per worker, particularly in the industrial sector. In several counties, hours per workers declined and hourly wages changed little. But both the magnitude and nature of the adjustments varied considerably across countries. For a given drop in GDP, earnings declined more in countries with larger manufacturing sectors, smaller export sectors, and more stringent labor market regulations. In addition, overall employment became more sensitive to GDP growth. These findings have implications that go beyond the recent financial crisis as they highlight (i) the limitations of focusing policies responses on maintaining jobs and providing alterative employment or replacement income for the unemployed and (ii) the critical role of fast-track data systems, capable of monitoring ongoing labor market adjustment during economic downturns, in supporting the design of effective policy responses.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5956.
Length: 24 pages
Date of creation: Sep 2011
Date of revision:
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- Khanna, Gaurav & Newhouse, David & Paci, Pierella, 2011. "Fewer jobs or smaller paychecks ? aggregate crisis impacts in selected middle-income countries," Policy Research Working Paper Series 5791, The World Bank.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-09-22 (All new papers)
- NEP-LAB-2011-09-22 (Labour Economics)
- NEP-LMA-2011-09-22 (Labor Markets - Supply, Demand, & Wages)
- NEP-MAC-2011-09-22 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- McKenzie, David J., 2003. "How do Households Cope with Aggregate Shocks? Evidence from the Mexican Peso Crisis," World Development, Elsevier, vol. 31(7), pages 1179-1199, July.
- Dionisius Narjoko & Hal Hill, 2007.
"Winners and Losers during a Deep Economic Crisis: Firm-level Evidence from Indonesian Manufacturing ,"
Asian Economic Journal,
East Asian Economic Association, vol. 21(4), pages 343-368, December.
- Dionisius Narjoko & Hal Hill, 2006. "Winners and Losers during a Deep Economic Crisis: Firm-level Evidence from Indonesian Manufacturing," Departmental Working Papers 2006-13, The Australian National University, Arndt-Corden Department of Economics.
- Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, vol. 26(1), pages 61-74, January.
- Julian di Giovanni & Andrei A. Levchenko, 2006.
"Trade Openness and Volatility,"
Development Working Papers
219, Centro Studi Luca d\'Agliano, University of Milano.
- Gutierrez, Catalina & Orecchia, Carlo & Paci, Pierella & Serneels, Pieter, 2007. "Does employment generation really matter for poverty reduction ?," Policy Research Working Paper Series 4432, The World Bank.
- Chris Manning, 2000. "Labour Market Adjustment to Indonesia's Economic Crisis: Context, Trends and Implications," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(1), pages 105-136.
- Hal HILL & Takashi SHIRAISHI, 2007. "Indonesia After the Asian Crisis," Asian Economic Policy Review, Japan Center for Economic Research, vol. 2(1), pages 123-141.
- McKenzie, David J, 2004. "Aggregate Shocks and Urban Labor Market Responses: Evidence from Argentina's Financial Crisis," Economic Development and Cultural Change, University of Chicago Press, vol. 52(4), pages 719-58, July.
- Fretwell, David H. & Benus, Jacob & O'Leary, Christopher J., 1999. "Evaluating the impact of active labor programs : results of cross country studies in Europe and Central Asia," Social Protection Discussion Papers 20131, The World Bank.
- Fabrizio Bresciani & Gershon Feder & Daniel O. Gilligan & Hanan G. Jacoby & Tongroj Onchan & Jaime Quizon, 2002. "Weathering the Storm: The Impact of the East Asian Crisis on Farm Households in Indonesia and Thailand," World Bank Research Observer, World Bank Group, vol. 17(1), pages 1-20.
- Dollar, David & Hallward-Driemeier, Mary, 2000. "Crisis, Adjustment, and Reform in Thailand's Industrial Firms," World Bank Research Observer, World Bank Group, vol. 15(1), pages 1-22, February.
- Cesar Calderon & Tatiana Didier, 2009. "Severity of the Crisis and its Transmission Channels," World Bank Other Operational Studies 10946, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.