## Growth: An Essential Part of a Cure for Unemployment

_IMF Blog, November 19, 2014_

## Source details

**Canonical URL:** [Growth: An Essential Part of a Cure for Unemployment](https://www.imf.org/en/blogs/articles/2014/11/19/growth-an-essential-part-of-a-cure-for-unemployment)

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## Bibliographic details
- Authors: Davide Furceri, Prakash Loungani
- Published: November 19, 2014

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### Global unemployment and the question of growth
- Nearly 200 million people around the world are looking for work.
- Half of the unemployed are in emerging markets and about a quarter in advanced economies.
- The paper examines whether stronger output growth reduces unemployment across country groups, using a sample of about 80 countries (including the G20).

### Empirical findings: the growth–jobs nexus
- Advanced economies (average): unemployment falls by a third of a percentage point for each additional percentage point of real GDP growth.
- Emerging market economies (average): an additional percentage point of output growth lowers the unemployment rate by ¼ of a percentage point.
- Employment growth response (right panel of Figure 2):
  - Impact of output growth on employment growth is stronger in advanced and emerging economies than in frontier and other developing economies.
  - Emerging markets (average): a percentage point of output growth raises employment growth by 0.2 percentage points.
- G20 historical links between growth and jobs (Figure 3):
  - Range across most G20 members from 0.6 in the United States to about 0.2 in Russia.
- Broad conclusion:
  - The relationship between growth and jobs holds well in a number of emerging economies; in frontier and other developing economies the relationship is much weaker.
  - Growth is not a panacea, but it is an essential part of the cure for unemployment.

### Policy implications and what will deliver extra growth
- Complementarity of demand and supply policies:
  - Continued support to domestic demand is necessary so that firms see improved sales prospects and expand capacity.
  - Adoption of policies and reforms that can boost supply is required to make growth durable; supply measures alone may have little short-run impact without demand support.
- Advanced economies:
  - Monetary policy should continue to support the recovery in demand.
  - Fiscal adjustment should be attuned in pace and composition to country needs and be as growth-friendly as possible.
- Emerging markets:
  - Need to address underlying structural problems, which vary across countries (examples include removing bottlenecks in the power sector and reforms on labor and product markets).
- Infrastructure:
  - In many countries, increasing public infrastructure investment is justified:
    - Provides a boost to demand in the short term.
    - Helps supply (potential output) over the longer term.

### Bottom line
- Growth can help job creation, but the extent varies across emerging markets and across advanced economies.
- While growth alone will not solve all unemployment problems, it is an essential component of policy strategies to reduce unemployment.

*Source: Growth: An Essential Part of a Cure for Unemployment — Davide Furceri, Prakash Loungani (November 19, 2014).*

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## Content in this bundle

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## References

- [عربي](http://blog-montada.imf.org/?p=3314)
- [fifth largest](http://www.imf.org/external/np/speeches/2014/101014.htm)
- [https://www.imf.org/wp-content/uploads/2014/11/unemploymentgrowth-chart-11.jpg](https://www.imf.org/wp-content/uploads/2014/11/unemploymentgrowth-chart-11.jpg)
- [link](http://blogs.imf.org/2014/02/07/are-jobs-and-growth-still-linked/)
- [https://www.imf.org/wp-content/uploads/2014/11/unemploymentgrowth-chart-21.jpg](https://www.imf.org/wp-content/uploads/2014/11/unemploymentgrowth-chart-21.jpg)
- [https://www.imf.org/wp-content/uploads/2014/11/unemploymentgrowth-chart-31.jpg](https://www.imf.org/wp-content/uploads/2014/11/unemploymentgrowth-chart-31.jpg)
- [World Economic Outlook](http://www.imf.org/external/pubs/ft/weo/2014/02/)
- [slowing](http://www.imf.org/external/pubs/ft/survey/so/2014/pol061214a.htm)
- [public infrastructure investment](http://www.imf.org/external/pubs/ft/survey/so/2014/res093014a.htm)

_Source: https://www.imf.org/en/blogs/articles/2014/11/19/growth-an-essential-part-of-a-cure-for-unemployment_