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Effects of pro-growth policies on employment: evidence of regional disparities

Author

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  • Bassem Kamar
  • Damyana Bakardzhieva
  • Mohamed Goaied

Abstract

The main objective of our research is to study the direct impact of pro-growth economic policies on employment creation globally and regionally, as evidence has countered policy-makers’ expectation that output growth leads automatically to job creation. We innovate by using the ratio of employment to the population above 25 years as dependent variable instead of the customary employment elasticity. We apply generalized methods of moments’ econometrics on dynamic panel data models and find that growth stimulates employment creation on average across 76 countries. The policies promoting private sector credit, investments, openness, services, education spending, tertiary enrollment, and a fixed exchange rate are the ones that create employment. Larger government size undermines job creation, while policies promoting FDI and industrial development fail to stimulate employment. However, we establish that the effect of pro-growth policies on employment varies significantly across regions, with evidence of weaker links between economic policies and employment in Sub-Saharan Africa and the Middle East.

Suggested Citation

  • Bassem Kamar & Damyana Bakardzhieva & Mohamed Goaied, 2019. "Effects of pro-growth policies on employment: evidence of regional disparities," Applied Economics, Taylor & Francis Journals, vol. 51(40), pages 4337-4367, August.
    • Handle: RePEc:taf:applec:v:51:y:2019:i:40:p:4337-4367
    DOI: 10.1080/00036846.2019.1591596
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    Cited by:

    1. Abidemi C. Adegboye, 2020. "Macroeconomic policies and sustainable employment yields in sub‐Saharan Africa," African Development Review, African Development Bank, vol. 32(4), pages 515-527, December.
    2. Stijn Baert, 2022. "What shifts did covid-19 year 2020 bring to the labour market in Europe?," Applied Economics Letters, Taylor & Francis Journals, vol. 29(15), pages 1447-1454, September.
    3. Joohun Han & Chanjin Chung, 2021. "Impact of Aging and Underemployment on Income Disparity between Agricultural and Non-Agricultural Households," Sustainability, MDPI, vol. 13(21), pages 1-15, October.

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