Does Growth Create Jobs in the G-20 Economies?
There is a striking variation among the G-20 countries in the extent to which employment and unemployment respond to growth over the course of a year. In some countries (for example, Australia, Korea and South Africa), labor markets are quite responsive to overall economic conditions: when growth picks up, so does employment, and unemployment falls. In other countries (for example, Brazil, China, Turkey) the response is quite muted: measured employment and unemployment barely budge when growth picks up or slows down. These differences among countries have not changed much since the Great Recession. Thus, a pick-up in growth will result in more jobs, but the extent of job creation in the short run could vary significantly across countries. Unemployment remains a global concern: if they formed their own country, the unemployed would constitute the fifth most populous country in the world. Reducing unemployment was endorsed as a policy priority at the G-20 Leaders Summit last November, but what concretely can be done to create jobs and lower unemployment? One open issue is whether a pick-up in economic growth leads to job creation in the short run (say, over the course of a year). This brief provides evidence on this issue by studying the historical link between jobs and growth. The main finding is that growth leads to jobs but the strength of the link varies considerably across countries.