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Structural change, productivity growth and labour market turbulence in Africa

Author

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  • Mensah, Emmanuel

    () (UNU-MERIT)

  • Owusu, Solomon

    () (UNU-MERIT)

  • Foster-McGregor, Neil

    () (UNU-MERIT)

  • Szirmai, Adam

    () (UNU-MERIT)

Abstract

This paper combines a standard decomposition of labour productivity with a decomposition of labour market turbulence to study the role of structural change and job reallocation in the economic growth performance of African countries over the past fifty years using an updated and expanded version of the Africa Sector Database (ASD) developed by the Groningen Growth and Development Centre (GGDC). The results show that productivity growth has been generally low since the 1960s with moderate contributions from structural change across the entire period. Although productivity growth from structural change is generally low, a regional comparison shows that structural change is more rapid in East Africa than in the other regions of sub-Saharan Africa (SSA). While structural change accounts for more than half of the labour productivity growth in East Africa, within-sector productivity growth accounts for more than half of the labour productivity growth in West Africa and Southern Africa. Structural change is characterised by a net reallocation of workers across different sectors. As such, we compute the labour market turbulence effect of structural change. The turbulence effect of structural change has been mostly felt in the Service Sector due to volatile demand and the high level of informality. The paper further makes the first attempt to estimate the effect of labour market flexibility on job reallocation in Africa. The results show that more rigid labour markets reduce job reallocation across sectors impeding structural change and productivity growth in Africa.

Suggested Citation

  • Mensah, Emmanuel & Owusu, Solomon & Foster-McGregor, Neil & Szirmai, Adam, 2018. "Structural change, productivity growth and labour market turbulence in Africa," MERIT Working Papers 2018-025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2018025
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    File URL: https://www.merit.unu.edu/publications/wppdf/2018/wp2018-025.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Mijiyawa,Abdoul Ganiou & Conde,Lancine, 2020. "Structural Change and Productivity Growth in Guinea," Policy Research Working Paper Series 9341, The World Bank.
    2. Mensah, Emmanuel B., 2020. "Is sub-Saharan Africa deindustrializing?," MERIT Working Papers 2020-045, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Djidonou, Gbenoukpo Robert & Foster-McGregor, Neil, 2020. "Stagnant manufacturing growth in India: The role of the informal economy," MERIT Working Papers 2020-041, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Mensah, Emmanuel B. & Owusu, Solomon & Foster-McGregor, Neil, 2020. "Productive efficiency, technological change and catch up within Africa," MERIT Working Papers 2020-033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Keywords

    Labour Market Turbulence; Productivity Growth; Structural Change; Africa;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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