The Challenge of Jobless Growth in Developing Countries: An Analysis with Cross-Country Data

Although high rate of economic growth is necessary condition for rapid poverty reduction on a sustained basis, this is not a sufficient condition, and the relationship between economic growth and poverty reduction is not invariant. Similar rates of economic growth are found to be associated with different rates of poverty reduction. One of the variables that have been found to be significant in explaining the variation in the rate of poverty reduction is the employment intensity of economic growth. The following questions are addressed: First, can there be growth of output without the growth of employment? Second, would the pursuit of employment intensive growth result in a compromise with productivity and efficiency? Third, how does one explain the phenomenon of low and declining employment intensity of growth and what are the real constraints on employment growth? A number of gaps in the literature relating to the sectoral composition of output are also identified. It also points to what needs to be done if an employment diagnostic exercise were to be carried out in a particular country.