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The Challenge of Jobless Growth in Developing Countries: An Analysis with Cross-Country Data

Author: Rizwanul Islam

Although high rate of economic growth is necessary condition for rapid poverty reduction on a sustained basis, this is not a sufficient condition, and the relationship between economic growth and poverty reduction is not invariant. Similar rates of economic growth are found to be associated with different rates of poverty reduction. One of the variables that have been found to be significant in explaining the variation in the rate of poverty reduction is the employment intensity of economic growth. The following questions are addressed: First, can there be growth of output without the growth of employment? Second, would the pursuit of employment intensive growth result in a compromise with productivity and efficiency? Third, how does one explain the phenomenon of low and declining employment intensity of growth and what are the real constraints on employment growth? A number of gaps in the literature relating to the sectoral composition of output are also identified. It also points to what needs to be done if an employment diagnostic exercise were to be carried out in a particular country.

Occasional Paper Series is a new BIDS initiative to facilitate timely dissemination of research outputs and information. This paper is the first issue under this initiative.

Dr. Rizwanul Islam is Former Special Adviser on Growth, Employment and Poverty Reduction; Employment Sector, International Labour Office (ILO), Geneva. His previous positions include Director, Economic and Labour Market Analysis, and other directorial positions at the ILO. Dr. Rizwanul Islam did his PhD in Economics at the London School of Economics and Political Science. He specializes in development economics with particular focus on employment, poverty and income distribution, and he has published a number of journal articles and books in this field.

This paper was prepared while Dr. Rizwanul Islam was a Visiting Scholar at BIDS during November 2009-February 2010.

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