Showing posts with label Inclusive Growth. Show all posts
Wednesday, January 14, 2015
Global Joblessness Returns To Precrisis Levels In New IMF Employment Gauge
Global unemployment is finally back to levels seen before the global financial crisis. But the recession has left a sharp divergence between advanced and emerging economies, according to a new gauge unveiled by the International Monetary Fund.
The world’s jobless rate ended 2014 at 5.6%, where it stood in 2007. But global employment is growing at just 1.5% a year, far slower than the 2% to 2.5% growth rate seen before the crisis.
The figures are from a new Global Jobs Index by the IMF and the Economist Intelligence Unit. The index, the first worldwide gauge of its kind, will offer quarterly estimates based on employment in 64 economies that represent about 95% of the world’s economic output and 80% of its labor force. (Some jobs numbers are drawn from historical relationships between jobs and economic growth.)
The world’s top policy makers, convening through the G-20 and the IMF, have long used overall economic growth measures to assess their progress. But they often note that jobs are the key measure of their success. The latest gauge shows one way they’re struggling. Top-line measures such as unemployment are returning to normal levels in many nations, including the U.S., but overall employment growth remains sluggish.
“The index can be used to take the pulse of global labor markets at more regular intervals than has been done before,” IMF economist Prakash Loungani wrote. “While financial markets are monitored second-by-second, data on jobs—which matters more to most people—are often not available every quarter because many countries do not report employment numbers in a timely manner.”
The new report shows a striking divergence between advanced and emerging economies. Unemployment in advanced economies–members of the Organization for Economic Cooperation and Development–stood at 7.4% in 2014, far higher than the 5.7% seen in 2007. The eurozone is largely responsible for that elevated level, with most economies other than Germany struggling to regain ground.
Emerging markets have generally fared better on the employment front, at least according to official measures. But the report notes that official gauges for China and India, which together account for 40% of the global labor force, are widely seen as too low. Substituting a measure of joblessness for those countries from the private Economist Intelligence Unit would put the global unemployment rate in 2014 just above 7%.
From the Wall Street Journal:
Global unemployment is finally back to levels seen before the global financial crisis. But the recession has left a sharp divergence between advanced and emerging economies, according to a new gauge unveiled by the International Monetary Fund.
The world’s jobless rate ended 2014 at 5.6%, where it stood in 2007. But global employment is growing at just 1.5% a year, far slower than the 2% to 2.5% growth rate seen before the crisis.
Posted by at 9:58 PM
Labels: Inclusive Growth
Thursday, November 20, 2014
Does Growth Lower Unemployment? (Was Krugman Right Yet Again)?
On July 9, 2011 when U.S. unemployment was at record highs, Paul Krugman wrote: “Why is unemployment remaining high? Because growth is weak — period, full stop, end of story.” Krugman went on to appeal to an old relationship known as Okun’s Law: “Historically, low or negative growth has meant rising unemployment, fast growth falling unemployment (Okun’s Law).”
How well has Okun’s Law held up in the 3 ½ years since Krugman wrote? The evidence for the period 1947 to the present is shown below. It is evident that, for the U.S., Okun’s Law has held up quite well, as I have noted before.
In a recent presentation at Oberlin College, I also looked at how well Okun’s Law holds across the world. If you don’t want to flip through the (fascinating) 100-slide presentation, I did a short summary this week for the IMF’s blog.
On July 9, 2011 when U.S. unemployment was at record highs, Paul Krugman wrote: “Why is unemployment remaining high? Because growth is weak — period, full stop, end of story.” Krugman went on to appeal to an old relationship known as Okun’s Law: “Historically, low or negative growth has meant rising unemployment, fast growth falling unemployment (Okun’s Law).”
How well has Okun’s Law held up in the 3 ½ years since Krugman wrote? Read the full article…
Posted by at 5:36 PM
Labels: Inclusive Growth
Wednesday, October 8, 2014
Is Unemployment Inevitable?
My answer: “No”. For details, see my presentation at the European Trade Union Institute conference.
Posted by at 2:37 PM
Labels: Inclusive Growth
Tuesday, September 23, 2014
Moving on: Labor mobility in the United States
There is an old quip about a guy who hears on the local news that most accidents happen within five miles of home. “Darn, I’ve got to move,” he says to himself. Moving wouldn’t solve this guy’s problem, but moving on has generally been an important means of responding to bad news about regional prospects. For the United States, the importance of labor mobility as an adjustment mechanism in the face of adverse regional shocks was shown in a classic paper by Blanchard and Katz (1992). Over 20 years later, how have the Blanchard-Katz findings held up?
Mai Dao, Davide Furceri and I have updated and extended the Blanchard-Katz findings in a new paper. What do we find?
- Labor mobility remains an important adjustment mechanism in the United States. The use of direct migration data and of instrumental variables estimation, however, suggests that the response of mobility is weaker than in the original Blanchard-Katz paper.
- There are larger mobility responses to regional shocks in recessions than in good times. This seems counter-intuitive: is it really worth moving during a recession from a place with 12 percent unemployment to a place with 7 percent unemployment?. We try to understand why this might be the case and suggest that the answer could lie in cyclical variation in the ability to smooth consumption. Using standard tests, we show that the ability to insure consumption against idiosyncratic risk is pro-cyclical, rising in booms while being almost absent in recessions. Hence it appears that the increased migration during recessions comes out of the desperation of people who have run out of other options.
- Some suggestive evidence in support of this view comes from micro data: we show that it is mostly the long-term unemployed and labor market entrants who undertake the bulk of increased migration during recessions. The long-term unemployed tend to experience larger and more persistent income losses and labor market entrants have the least savings to tap into and less collateral to obtain loans. Therefore one would also expect these groups to have the lowest ability to smooth consumption over the downturn.
In an earlier version of the paper we also compared labor mobility in Europe and the US; these findings were summarized by Krugman.
There is an old quip about a guy who hears on the local news that most accidents happen within five miles of home. “Darn, I’ve got to move,” he says to himself. Moving wouldn’t solve this guy’s problem, but moving on has generally been an important means of responding to bad news about regional prospects. For the United States, the importance of labor mobility as an adjustment mechanism in the face of adverse regional shocks was shown in a classic paper by Blanchard and Katz (1992).
Posted by at 11:16 AM
Labels: Inclusive Growth
What Lies Beneath: A Sub-National Look at Okun’s Law
Saurabh Mishra and I have been estimating Okun’s Law for U.S. states. It seems to hold quite well in most states. Judge for yourself:
http://murmuring-harbor-6048.herokuapp.com/index.html
Saurabh Mishra and I have been estimating Okun’s Law for U.S. states. It seems to hold quite well in most states. Judge for yourself:
http://murmuring-harbor-6048.herokuapp.com/index.html
Posted by at 11:12 AM
Labels: Inclusive Growth
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