IMF Research Bulletin, September 2016

Abstract

Global job creation remains sluggish, prompting calls for policy actions to raise economic growth. Will growth create jobs? Recent IMF research documents a striking variation among countries in the extent to which employment responds to GDP growth over the course of a year. In some countries, labor markets are quite responsive: when growth picks up, employment goes up and unemployment falls; in other countries the response is quite muted. Thus, a pickup in growththrough aggregate demand stimulus for instance-will result in more jobs, but the extent of job creation in the short run could vary sharply across countries. Some structural measures can thus serve as useful complementary policies, as also discussed in IMF research. The global unemployment rate increased sharply during the Great Recession to a peak of 6.2 percent in 2009 (Figure 1a). The increase in unemployment in