Jobs, growth and poverty: what do we know, what don't we know, what should we know?

Working and discussion papers
May 2011
Claire Melamed, Renate Hartwig and Ursula Grant

Jobs, and in particular the quantity and quality of new jobs created by economic growth, are shaping up to be one of the crucial development issues of the moment. The International Labour Organization estimates that 440 million new jobs need to be created in the next ten years to keep up with population growth and demographic changes. It’s not just creating jobs that is the challenge. Nearly half of all workers worldwide still live below the $2 a day poverty line – jobs must also pay enough to end poverty.

The key determinants of the relationship between growth, poverty reduction and inequality are whether economic growth generates new jobs, the quality of these jobs, whether poor people are able to take up new opportunities, and whether jobs are stable enough to last in the face of economic shocks.

But we know surprisingly little about the empirical relationships between growth episodes and different types of employment, and even less about what policies and programmes might enhance positive linkages between the two. This is an urgent policy question, since economic growth has a very mixed record in job creation.

This Background Note summarises the current state of thinking in this area, and highlights five trends that are likely to shape effective policy on growth and employment in the next few years.

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