A Cross-Country Analysis of the Employment Intensity of Economic Growth A Cross-Country Analysis of the Employment Intensity of Economic Growth

In this paper, we examine the relationship between economic growth and employment in six developed nations from 1990 to 2006. Models are developed to estimate the employment intensity of economic growth within each nation. Among those for whom a significant relationship was found, employment intensity is estimated to range from 0.14 to 0.33. Once the model is augmented to account for persistence in employment growth, employment intensity diminished in a majority of the nations, but remained significant in most, ranging from 0.16 to 0.33. The model was further modified to examine the dynamic nature of the relationship between employment and economic growth using impulse response analysis. As before, differences in the responsiveness of employment to economic growth are found between the nations studied. Reasons for the differences in the employment intensity of economic growth between nations are discussed. Evidence is found suggesting that nations with high labor force growth rates and/or relatively large service sectors tend to exhibit higher levels of employment intensity of economic growth.