Share Of Manufacturing Employment Research Articles

Structural transformation and inequality: Does trade openness matter?

AbstractThe purpose of this paper is to examine income inequality in the process of economic growth and structural transformation with emphasis on the role of economic openness using a new measure of trade openness (the price convergence index [PCI]), which is an alternative measure to the widely used trade‐to‐GDP ratio. The analysis is based on a multi‐country panel data covering 48 countries for the period from 1960 to 2010. The results suggest that an increase in the share of employment in manufacturing is associated with a reduction in income inequality. This inequality‐reducing effect is significantly greater for countries with more open trade regimes. In addition, the Kuznets‐type relationship exists between services employment share and income inequality, with inequality first increasing with the movement of workers from agriculture to services and then decreasing. This inequality‐increasing effect of services employment share is also larger for countries with more open trade regimes. The findings withstand the inclusion of relevant explanatory variables, an alternative measure of income inequality, and alternative estimator to address possible endogeneity.

Time-varying capital intensities and the hump-shaped evolution of economic activity in manufacturing

Manufacturing’s share of employment is known to follow a hump-shaped pattern as economies structurally transform. Motivated by the observation that sectoral capital intensities evolve over time, this paper examines whether such changes are important in accounting for this pattern. It does this by putting forth a structural transformation theory that allows for time-varying capital intensities, heterogeneous TFP, Engel curves and trade. The model is calibrated to South Korea (1970–2010), a country for which the rise and decline of the manufacturing employment share occurred within four decades for which comprehensive measures of sectoral capital income shares are available. I show that whereas traditional drivers matter for various elements of development, time-varying capital intensities are critical for generating the complete hump-shaped pattern in manufacturing employment: Time-varying capital intensities trigger an additional “push” of labor out of manufacturing, generating differences between employment and value added shares that are in line with the observed patterns of structural transformation in South Korea.

Rethinking Unconditional Convergence in Manufacturing in the Age of New Technologies

Abstract We revisit unconditional convergence within manufacturing with a focus on differences in technology intensity across industries. For Latin American and Sub-Saharan African economies, we observe that low-technology and medium-technology intensive industries experience a significantly slower convergence in comparison to high-technology intensive ones. In contrast, we find no evidence of a significant differential for low-technology industries’ convergence in Asian economies, and if anything, we see that medium-technology intensive sectors experience a faster convergence than high-technology industries. In developed economies, we observe that while low-technology industries experience a slightly slower convergence, medium-technology industries converge at similar rates to high-technology industries. We also find that these differences emerge during the period of increased global integration, which exposed developing economies to increased competition both from advanced markets and fast industrializers within the developing world. Finally, we show that differential convergence patterns are stronger after the peak of manufacturing employment share has been reached. We discuss the implications of these trends for the future of development policy making.

DETERMINAN TINGKAT PARTISIPASI ANGKATAN KERJA PEREMPUAN DI INDONESIA TAHUN 2015-2019 MENGGUNAKAN MODEL REGRESI DATA PANEL

Tingkat partisipasi angkatan kerja (TPAK) perempuan di Indonesia selalu lebih rendah dari TPAK laki-laki, bahkan perbedaannya sangat jauh dan tidak pernah mengerucut. Selain itu, tren TPAK perempuan mengalami stagnasi pada kisaran 50 persen selama lebih dari satu dekade terakhir. Oleh karena itu, penelitian ini bertujuan untuk menyelidiki determinan TPAK perempuan di Indonesia tahun 2015-2019. Metode analisis yang digunakan adalah analisis inferensia dengan model regresi data panel. Fixed efffect model (FEM) dengan metode seemingly unrelated regression (SUR) dipilih sebagai model terbaik untuk melakukan estimasi model regresi data panel. Hasil penelitian ini menunjukan bahwa semakin tinggi rata-rata lama sekolah (RLS) perempuan, upah tenaga kerja perempuan, jumlah tenaga kerja sektor industri pengolahan, jumlah tenaga kerja sektor pertanian dan produk domestik regional bruto atas dasar harga konstan (PDRB ADHK) dapat meningkatkan TPAK perempuan di Indonesia. Sementara itu, semakin tinggi jumlah penduduk yang mengurus rumah tangga dapat menurunkan TPAK perempuan di Indonesia.

Is Indonesia's growth rate balance-of-payments-constrained? A time-varying estimation approach

This paper analyses the performance of Indonesia's economy since the early 1980s using Thirlwall's balance-of-payments-constrained (BoPC) growth model, estimated in state-space form to take account of the varying nature of the income elasticities of demand for exports and imports. Results indicate that after peaking in the mid 1980s at above 10 percent, Indonesia's BoPC growth rate has declined significantly, to about 3 percent in recent years. This is the result of changes in the three components of this growth rate: the income elasticities of demand for exports and imports, and the growth rate of world income, all three significantly lower. Especially worrisome for Indonesia's future is the decline in the income elasticity of demand for exports, a variable that summarizes the non-price competitiveness of its exports. This is the consequence of the lack of progress in upgrading the export basket and increasing its sophistication, with natural resources and low value-added manufacturing still dominating the country's exports. Focusing on the two income elasticities, the analysis shows that their determinants are variables that proxy the economy's structural changes (for example, the manufacturing employment share) and within-sector productivity growth (for example, complexity of the economy, gross fixed capital formation as a share of GDP).

Labor Market Hollowing-Out in North Carolina: Measurement and Analysis

Hollowing-out of the labor force, meaning the relative decline in middle-paying jobs combined with the relative rise in both high-paying and low-paying jobs, has been a phenomenon observed and analyzed at the national level. This paper extends that work by analyzing job shifts in 46 regions of North Carolina during the 21st century. From 2001 to 2015, hollowing-out occurred in all but one of the regions, but to different degrees. An empirical analysis shows the relative decline of middle-paying jobs was stronger in regions with a larger share of employment in manufacturing and construction and in regions with slower population growth.

Kuznets Revisited: What Do We Know about the Relationship between Structural Transformation and Inequality?

This paper revisits the Kuznets postulate that structural transformation will be associated with increasing inequality using comparable time series data for 32 developing and recently developed economies for the post-1950 period. We find that structural transformation in the majority of our economies has resulted in the movement of workers from agriculture to services, and not to manufacturing. Economies show different paths of structural transformation that cut across geographical regions, being either structurally underdeveloped, structurally developing, or structurally developed. We see clear differences in the structural transformation–inequality relationship depending on the stage of structural transformation that a particular economy is in, as well as across regions. We do not see a Kuznets-type relationship between manufacturing employment share and inequality when we take into account the different paths of industrialization that economies in our dataset have followed. On the other hand, inequality unambiguously increases with structural transformation if the movement of workers from agriculture is to services.

Import competition and local labor markets: the case of Indonesia

This paper analyzes the effects of import competition on Indonesian local labor markets in term of manufacturing employment share, non-manufacturing employment share, unemployment rate, and wages. A rapid increase of globalization has caused many countries including Indonesia experienced a significant increase in imports, which lead to a tougher import competition. Using data of imports and 430 districts in Indonesia in the period of 2007-2013, we found that import competition has negatively affected manufacturing employment share, non-manufacturing employment share, and wages. It also increased unemployment. In addition, the highest impact was mainly driven by imports of consumption goods

Structural transformation and the rise of information technology

Has the emergence of information technology changed the structure of employment and earnings in the US? We propose a new index of occupation-level IT intensity and document several long-term changes in the occupational landscape over the past decades. Using Census and US KLEMS micro-data, we show that: (i) the bulk of productivity growth after 1950 is concentrated in IT intensive sectors; (ii) the share of workers in IT jobs has expanded significantly, with little or no pause and IT jobs enjoy a large and growing earnings premium, even after controlling for general task requirements (e.g., cognitive, non-routine); and (iii) the rise of the IT intensive employment share is closely associated with declines in the manufacturing employment share. While earnings premia for college-educated and cognitive/non-routine workers have flattened in the aggregate since 2000, we show that they continued growing in IT intensive jobs and that these jobs have played a key role in accounting for the surge of high tech service labor productivity. We also use our IT intensity index to estimate industry-specific elasticities of substitution between IT and non-IT intensive labor, finding values of 1.6 in manufacturing and 1.3 in services. Finally, we revisit a long-standing question about the relationship between technological progress and productivity and provide evidence that occupation-level IT intensity is positively associated with output growth, especially in the services sector.

Torn Apart? The Impact of Manufacturing Employment Decline on Black and White Americans

This paper examines the impact of manufacturing employment decline on the socio-economic outcomes within and between black and white Americans from 1960 to 2010. Exploiting variation across cities and over time, the analysis shows that manufacturing decline negatively impacted blacks (men, women, and children) in terms of their wages, employment, marriage rates, house values, poverty rates, death rates, single parenthood, teen motherhood, child poverty, and child mortality. In addition, the decline in manufacturing increased inequality within the black community in terms of overall wages and the gaps between education groups in wages, employment, and marriage rates. Many of the same patterns are found for whites, but to a lesser degree leading to larger gaps between whites and blacks in wages, marriage patterns, poverty, single-parenthood, and death rates. The results are robust to the inclusion or exclusion of several control variables, and the use of a shift-share instrument for the local manufacturing employment share. Overall, the decline in manufacturing is reducing socio-economic conditions in general while increasing inequality within and between racial groups which is consistent with a stronger general equilibrium effect of the loss of highly-paid, lower-skilled jobs on the less-educated segments of the population.

Agricultural Labour Productivity and Industrialisation: Lessons for Africa

Using data from the Groningen Growth and Development Center’s Africa Sector Database, we show that manufacturing employment and its share in total employment is growing in a number of African countries. We explore the extent to which this can be linked to agricultural productivity which has also been growing in much of Africa over the past two decades. We show that in countries that have successfully industrialised, there is a strong positive correlation between labour productivity growth in agriculture and the manufacturing employment share up until the point at which the manufacturing employment share peaks. Since 1996, there is also a positive correlation between labour productivity in agriculture and the manufacturing employment share in Africa. We explore the mechanisms behind these correlations and find evidence supporting the idea that increases in agricultural productivity have been associated with reductions in the employment share in agriculture and increases in income and the demand for locally produced products.

Structural Transformation and the Rise of Information Technology

Has the emergence of information technology changed the structure of employment and earnings in the US? We propose a new index of occupation-level IT intensity and document several long-term changes in the occupational landscape over the past decades. Using Census and US KLEMS micro-data, we show that: (i) the bulk of productivity growth after 1950 is concentrated in IT intensive sectors; (ii) the share of workers in IT jobs has expanded significantly, with little or no pause and IT jobs enjoy a large and growing earnings premium, even after controlling for general task requirements (e.g., cognitive, non-routine); and (iii) the rise of the IT intensive employment share is closely associated with declines in the manufacturing employment share. While earnings premia for college-educated and cognitive/non-routine workers have flattened in the aggregate since 2000, we show that they continued growing in IT intensive jobs and that these jobs have played a key role in accounting for the surge of high tech service labor productivity. We also use our IT intensity index to estimate industry-specific elasticities of substitution between IT and non-IT intensive labor, finding values of 1.6 in manufacturing and 1.3 in services. Finally, we revisit a long-standing question about the relationship between technological progress and productivity and provide evidence that occupation-level IT intensity is positively associated with output growth, especially in the services sector.

Structural Changes in Manufacturing Employment in India, 1999-2011

A study undertaken by Ghani and associates (2013) on the organized-unorganized sector breakup of India’s manufacturing employment has found persistence of the unorganized sector within manufacturing during 1989-90 to 2005-06. A similar analysis undertaken in the paper for a more recent period, 1999-2000 to 2011-12, reveals that the share of the unorganized sector in manufacturing employment has declined by about ten percentage points. A decomposition exercise drawing on the distribution of manufacturing employment by state, industry and organized-unorganized dichotomy brings out that the fall in the unorganized manufacturing employment share is mostly attributable to the within state-industry component, and the contribution of changes in employment composition, the between state-industry component and the covariance component, has been relatively small. Further examination of the issue reveals that the declining share of the unorganized sector in manufacturing employment may in part be explained by a noticeable structural shift that has taken place from own account enterprises to establishments within the unorganized manufacturing. Results of econometric analysis indicate that the fall in female labour force participation in India in the 2000s is one of the important factors explaining the declining share of the unorganized sector in manufacturing employment.

The Changing Structure of Africa’s Economies

Data from the Groningen Growth and Development Center's Africa Sector Database and the Demographic and Health Surveys reveals that much of Africa's recent growth and poverty reduction has been associated with a substantive decline in the share of the labor force engaged in agriculture. This decline is most pronounced for rural females over the age of 25 who have a primary education; it has been accompanied by a systematic increase in the productivity of the labor force, as it has moved from low productivity agriculture to higher productivity services and manufacturing. Although the employment share in manufacturing is not expanding rapidly, in most of the low-income African countries the employment share in manufacturing has not peaked and is still expanding, albeit from very low levels. More work is needed to understand the implications of these shifts in employment shares for future growth and development in Africa south of the Sahara.

The Importance of Manufacturing in Economic Development: Has This Changed?

Summary Manufacturing has traditionally played a key role in the economic development of developing countries. In recent years, it has been argued that the importance of manufacturing has diminished over the last 20–25 years, resulting in premature deindustrialization or non-industrialization in developing countries. This study explores whether the low levels of industrialization in developing countries are attributable to long-term changes in opportunities available to the sector around the globe. The study’s findings show that the manufacturing sector’s value added and employment contribution to world GDP and employment, respectively, have not changed significantly since 1970. The declining manufacturing value added and manufacturing employment share in many developing countries has not been caused by changes in the sector’s development potential but has instead resulted from a shift of manufacturing activities to a relatively small number of populous countries, thus resulting in a concentration of manufacturing activities in specific developing countries. As was the case in the last millennium, industrialization has continued to play a key role in the growth of developing countries, which have sustained rapid and long-term growth for the last 25 years. Achieving economic development by following the path of industrialization will likely remain important for low-income countries because they are able to take advantage of their backwardness relative to those countries which have already experienced rapid industrialization with a disproportionately large share of manufacturing activities, and could soon enter a mature stage of industrialization.

Productivity growth and labor reallocation: Latin America versus East Asia

Over the period 1963 to 2010, Latin American countries exhibit much slower de-agriculturalization than East Asian countries. The manufacturing employment share has been almost stagnant in Latin America, but exhibits a hump-shaped pattern in Korea and Taiwan. Both groups have moved increasingly toward service-based economies. A nine-sector general equilibrium model, treating sectoral productivity growth rates as exogenous, accounts for some of the differing sectoral allocations of employment in Latin America and East Asia over the sample period. I perform a series of experiments, replacing the sectoral labor productivity growth rates in each sector for each Latin American country with the corresponding growth rates in Korea and Taiwan. Low aggregate productivity growth in Latin America is an economy-wide phenomenon concerning all sectors; however, the findings highlight the possible importance of raising productivity in manufacturing and wholesale to have significant increases in aggregate productivity growth rates. I focus attention on the importance of the level of disaggregation in examining the relationship between labor productivity growth and sectoral movement of labor. Some evidence is presented in linking sectoral policies to productivity growth in Latin America and East Asia.

Population Size Effects in the Structural Development of England

The English structural transformation from farming to manufacturing was accompanied by rapid technological change, expansion of trade, and massive population growth. While the roles of technology and trade in this process have been investigated, the literature has largely ignored the role of population growth. We examine population size effects on various aspects of structural development, characterizing their explicit dependence on preference-side and production-side characteristics of the economy, and trade. Our quantitative analysis of the English transformation assigns a major role to population growth, with especially notable contributions to post-1750 rise in the manufacturing employment share and the relative price dynamics. (JEL J11, N13, N33, N53, N63, O33)

Can We Develop Enough Skills for a Robust Manufacturing Industry?

Does the U.S. face a skills gap limiting growth and incomes? Manufacturers often report weak skills but the question is controversial among economists. Many analyses deal only with academic skills and too often fail to cover the level and quality of occupational skills. Moreover, focusing on existing jobs ignores the role that skills can play in upgrading the mix of jobs in the economy. For example, countries that emphasize apprenticeship training retain a relatively high share of employment in manufacturing. This article examines the rationale for and feasibility of expanding apprenticeship in U.S. manufacturing. After describing apprenticeship’s cost for workers, employers and the government, the article shows how other approaches to expand apprenticeships can successfully upgrade skills and jobs.

Global Defeminization? Industrial Upgrading and Manufacturing Employment in Developing Countries

ABSTRACTGlobalization has for decades been associated with a rise in the female share of employment or feminization. This study finds that since the mid 1980s, export growth in developing countries is associated with feminization in some countries and a defeminization in others. Focusing on Southeast Asia and Latin America, it uses a fixed-effects econometric model to test whether the technological conditions of production (labor or capital intensity) rather than export growth account for shifts in the female share of employment in manufacturing. It finds that the capital intensity of production, evidenced by shifts in labor productivity, is negatively and significantly related to shifts in the female share of employment in manufacturing, while exports are statistically insignificant. The study concludes that an anti-female bias exists in labor demand changes that result from output or employment shifts in developing countries when manufacturing becomes more capital intensive, a process likely related to industrial upgrading.

The Decline of the U.S. Rust Belt: A Macroeconomic Analysis

No region of the United States fared worse over the postwar period than the Belt, the heavy manufacturing zone bordering the Great Lakes. We argue that a lack of competition in labor and output markets in the Rust Belt were responsible for much of the region's decline. We formalize this theory in a dynamic general-equilibrium model in which productivity growth and regional employment shares are determined by the extent of competition. When plausibly calibrated, the model explains roughly half the decline in the Rust Belt's manufacturing employment share. Industry evidence support the model's predictions that investment and productivity growth rates were relatively low in the Rust Belt.