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The role of sectoral growth patterns in labor market development

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  • Arias-Vazquez , Francisco Javier
  • Lee, Jean N.
  • Newhouse, David

Abstract

This paper investigates the relationship between sectoral growth patterns and employment outcomes. A broad cross-country analysis reveals that in middle-income countries, employment responds more to growth in less productive and more labor-intensive sectors. Employment in middle-income countries is susceptible to a resource curse, and grows rapidly in response to manufacturing and export manufacturing growth. Within Brazil, Indonesia, and Mexico, the effects of different sectoral growth patterns are context dependent, but differences in sectoral growth effects on employment and wages are substantially reduced in states or provinces with higher measured labor mobility. Consistent with this, aggregate employment and wage effects of growth by sector are close to uniform when examined over longer time horizons, after labor has an opportunity to adjust across sectors. The results reinforce the importance of growth in more labor-intensive sectors, and suggest that job mobility may be an important mechanism to diffuse the benefits of capital-intensive growth.

Suggested Citation

  • Arias-Vazquez , Francisco Javier & Lee, Jean N. & Newhouse, David, 2012. "The role of sectoral growth patterns in labor market development," Policy Research Working Paper Series 6250, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6250
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    Cited by:

    1. Richter, Kaspar & Witkowski, Bartosz, 2014. "Does growth generate jobs in Eastern Europe and Central Asia ?," Policy Research Working Paper Series 6759, The World Bank.
    2. Chacaltana, Juan, 2016. "Peru, 2002-2012: growth, structural change and formalization," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    3. International Monetary Fund, 2014. "Philippines; Selected Issues," IMF Staff Country Reports 14/246, International Monetary Fund.

    More about this item

    Keywords

    Labor Policies; Labor Markets; Economic Theory&Research; Achieving Shared Growth; Banks&Banking Reform;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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