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Development Strategies for more and better jobs


Development Strategies for More and Better Jobs

Author: François Bourguignon
Pub. Date: April 14, 2005
Topic: Labor Markets in Developing Countries
Full Text: Adobe Acrobat (PDF) [86 KB]


The employment/unemployment dichotomy is not applicable to developing countries. Workers who are categorized as “unemployed” are actually employed in the informal sector and have a “bad job.” One key issue facing developing countries is how to generate “good jobs” in sufficient quantity so as to absorb the increasing number of people appearing on the labor market. This paper discusses three labor market issues. First, in discussing the link between growth, openness and (good) job creation, the paper makes the point that globalization is beneficial provided that it does not contribute to reducing the labor content of growth. Second, the paper also focuses on the need for supply side policies to complement policies that increase the demand for labor. Unskilled workers without training are less likely to get “good” jobs. In fact, too few skilled workers may even be an obstacle for growth and the creation of good unskilled jobs. Third, the paper discusses labor market policies and social protection. Policies regulating the (formal) labor market, though they are second-best, should not necessarily be rejected on efficiency grounds if they reduce poverty. The questions to ask are: how much regulation should there be and how can social protection be achieved in economies with large informal sectors? Decoupling as much as possible labor market status and social protection is part of the answer since it reduces the distance between good and bad jobs. It provides better social protection to all workers, independently of where they are employed and increases the number of good jobs by reducing the cost of formal employment.

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