Job Creation Effect Research Articles

Capital subsidies and job creation in rural areas

Assesses the job creation effects of capital subsidies provided to small and medium enterprises in rural and lagging areas. The proposed methodology takes account of extensive censoring of job creation among assisted rural firms, endogeneity of the capital stock change resultant from capital subsidies, and the extensive part‐time and seasonal job requirements in rural areas. Capital stock change, as a result of grant aid is negatively related to the decision to create new jobs and to the extent of job creation given that some employment is created. Evidence of this work provides the ground for discussing the effectiveness and implications of using capital subsidies as a job creation instrument within rural development policies.

Effects on Employment of Trade and Technical Change: Evidence from Norway

Trade and technology‐related explanations for the change in plant‐level skill composition in Norway are examined by exploiting matched employer–employee data. The results show that the changes are taking place mainly through a reallocation of labour resources between plants within sectors, leading to greater dispersion of skills across establishments. Results from estimating plant‐level dynamic demand functions support skill‐biased technological change via a positive gross job creation effect. A strong impact from trade is also found along the gross job destruction margin for low‐ and medium‐educated workers in sectors exposed to increased competition from abroad. Highly educated workers are insulated from negative trade effects.

On dismissal pay

Wage and employment effects of payments in the case of individual and collective dismissals are investigated in a shirking model of efficiency wages. Payments for collective dismissals reduce the incentives to shirk and can increase employment and profits while they leave the workers' payoff unaffected. Thus, they can be agreed upon at the firm level. An economy-wide introduction induces positive externalities, given the job creation effect. This contrasts with payments for individual dismissals, which decrease the combined payoff of firms, workers, and the government.

A ‘Copernican Revolution’ in French Industrial Relations: Are the Times a’ Changing?

In 1998 and 1999 France passed the sixth and seventh laws in seventeen years affecting working time. They offered financial incentives to firms signing collective agreements that created or protected jobs and cut the legal working week from 39 to 35 hours from 1 January 2000. Early evidence suggests that while their direct job creation effect is limited they are moderating wage settlements and leading to more flexible working patterns. In this paper I situate the new hour laws within the long historical tradition of state political intervention over working time and argue that this remains a key element in reforming French industrial relations.

Job Creation and Job Destruction, Worker Reallocation, and Wages

Using Danish firm (workplace) data on employment reallocation merged with individual records, the effects of job creation/destruction and worker reallocation on wages are estimated using fixed effects techniques. After controlling for business cycle fluctuations, job creation is found to increase male wages. The effect of net job creation seems present at all phases of the business cycle. Entry wages as well as wages of low tenure workers appear much more sensitive to idiosyncratic job creation than wages of those who are already employed in a given firm. Except for entry wages, female wages are found insensitive to net job creation.

The social cost of labor in rural development: job creation benefits re-examined

Abstract Job creation effects are examined as they would apply to social analysis of rural development programming by public or private sector agencies. A synthesis and critique are provided of approaches to valuing the social opportunity cost of labor. These approaches vary according to whether or not unemployment is present in the pre-project state and according to whether or not there is interregional migration in response to project hiring. Graphical, partial equilibrium analysis illustrates why, in general, job creation and project employment give rise to social costs, not benefits. The magnitude of these social costs is shown to depend upon the presence of payroll taxes, wage subsidies and unemployment, in addition to the market’s supply and demand elasticities. These social costs may be reduced or offset in specific instances where projects increase the value of labor’s productivity or reduce its costs, such as with job training, worker mobility and skill development projects. Careful attention to these approaches can help society choose correctly among alternative development proposals and among alternative (labor-intensive versus capital-intensive) technologies.

Trade Integration with Europe and Labor Reallocation in the Southern Mediterranean Countries: The Case of Egypt

This paper looks at the implications of the Euro-Mediterranean partnership agreement on labor and wages in Egypt, using a dynamic CGE model, which takes into account the labor market segmentation. Our results suggest that trade liberalization bears the risk of promoting the use of capital-intensive technology, thus reducing the employment content of growth. Employment policies that increase the mobility between the segments of the labor market and the wage flexibility could enhance the job creation effect induced by the trade liberalization. Employment and trade policies are also complementary in political terms, by alleviating the losses borne by the insiders following the entry of new workers into the labor market.

Active labor market policies, job matching and the Czech miracle

A common explanation of low unemployment rates in the Czech Republic (CR) is the stance of active labor market policies (ALMPs), in particular, the extensive use of ALMP instruments and an effective delivery system. Using a large panel of quarterly data from employment office districts, we estimate the effects of ALMPs on the job matching process in the CR. In doing so, we address potential endogeneity in the provision of resources to district labor offices. We continue to find a small, but statistically significant effect of ALMP expenditures, job creation, and program intakes on outflows from unemployment into employment.

How many jobs does construction expenditure generate?

Extra public expenditure on construction is a frequently cited policy to alleviate demand deficient unemployment; yet the actual number of jobs created is uncertain. This paper surveys the job creation effect for the UK. It surveys previous estimates, then a construction employment model is estimated. The results do not conform to theoretical predictions, implying only a weak link between quarterly increases in total construction output and construction employment, and no significant relationship between housebuilding and employment. It is suggested that these results arise from poor quality data, especially the estimates of changes in the number of self-employed workers. As an alternative, construction industry rules-of-thumb are used to derive more plausible employment effects. Employment estimates are also provided for subsectors of the industry. To improve on these calculations we conclude that there is a need for either more accurate construction data or, failing that, periodic site-survey based esti...

The Job Creation Effects of Small and Large Firm Interaction

Geoff Robson is a lecture and Colin Gallagher is emertius professor of managment at the school of busienss managment, univeristy of newcastle upon tyne. England, in this paper, the effect of the interaction between small and large firms on the creation of jobs in the united kingdom over the period 1971 to 1989 are examined in detail. the result of four recent studies are used to assess the contribution of different size of firms to aggregate employment change. small firms have a greater ability and potential to create jobs than do large firms. the advantages which account for this extra ability, both due to the nature of small firms themselves and to the nature of the intereaction which take place between small and large firms, are identified and evaluated. Governement funding for small firms should be directed in that manner by which the nation will gain the most. it would therfore be wise to target those firms which are based in the wealth creating parts of both manufacturing and service sectors, which have eitehr grown idependently of large firms or whose growth would not adversely affect large firm growth and in particular, those small firms in which new innovations and technologies are likely to be developed should have priority for aid. the practical problem to date is taht of our inability to identify successfully those firms, however there is a danger that by viewing the small firm sector in isolation from large firms, sub-optimal economic and political decision may be reached. Although small firms in jobgeneration terms are iherently advangeaged and thier perfomace numerically dominant, it is important that small meaningfull, changes in large firm perfomance should not as a result be overlooked.

Is profit sharing a cure for unemployment in less developed countries?

The effects of introducing profit sharing in modern sectors in LDCs are discussed within a dual model with endogenous wages and internal migration. Profit sharing does not have a direct job creation effect as long as firms set the pay parameters. Yet the new system may have long-run effects on employment allocation. Under some circumstances profit sharing may in fact destabilize short-run employment such that jobs last for a shorter duration. Modern sector wages are then raised to discipline workers and urban unemployment goes up. Arguments are also given for the hypothesis that profit sharing stabilizes short-run employment with the opposite results.

URBAN UNEMPLOYMENT AND THE SPATIAL STRUCTURE OF LABOR MARKETS: AN EXAMINATION OF THE “TODARO PARADOX” IN A SPATIAL CONTEXT*

ABSTRACT The Todaro paradox and the effects of job creation in urban areas will be re‐examined in our spatial model in which the radius of the labor market is endogenously determined by the rational choices of workers. The travel cost of workers plays a crucial role in the choice between two different types of response, migration or commuting. By considering travel costs, we find that the Todaro paradox can be applied to developed, as well as developing, countries. Job creation in urban areas can produce a paradoxical increase in urban unemployment in developed countries, because the low marginal cost of travel will significantly increase the radius of the urban labor market and create new labor supply without migration.