Fewer Jobs or Smaller Paychecks? Aggregate Crisis Impacts in Selected Middle-Income Countries
This paper reviews evidence from 44 middle-income countries on how the recent financial crisis affected jobs and workers' incomes. In addition to providing a rare assessment of the magnitude of the impact across several middle-income countries...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110908084150 http://hdl.handle.net/10986/3555 |
| Summary: | This paper reviews evidence from 44
middle-income countries on how the recent financial crisis
affected jobs and workers' incomes. In addition to
providing a rare assessment of the magnitude of the impact
across several middle-income countries, the paper describes
how labor markets adjusted and how the adjustments varied
for different types of countries. The main finding is that
the crisis affected the quality of employment more than the
number of jobs. Overall, the slow-down in earning growth was
considerably higher than that in employment, and the decline
in gross domestic product was associated with a sharp
decline in output per worker, particularly in the industrial
sector. In several counties, hours per worker declined and
hourly wages changed little. But both the magnitude and
nature of the adjustments varied considerably across
countries. For a given drop in gross domestic product,
earnings declined more in countries with larger
manufacturing sectors, smaller export sectors, and more
stringent labor market regulations. In addition, overall
employment became more sensitive to growth in gross domestic
product. These findings have implications that go beyond the
recent financial crisis as they highlight (i) the
limitations of focusing policy responses on maintaining jobs
and providing alterative employment or replacement income
for the unemployed, and (ii) the critical role of fast-track
data systems that are capable of monitoring ongoing labor
market adjustment during economic downturns, in supporting
the design of effective policy responses. |
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