Wage employment, mobility and development

Transcription

1 Wage employment, mobility and development IDE-JETRO, World Bank, Asashi Shimbun Joint Symposium Evolving Sources of Value-added: Good-jobs, Bad-jobs? United Nations University Tokyo, March 19, 2015 Martin Rama Chief Economist for South Asia The World Bank

2 World Development Report 2013 The World Bank 3/13/2012 Moving jobs to center stage 2

3 Access the report at

4 Overview Jobs take people out of poverty. But not all jobs involve an employer and an employee. Wage employment drives mobility. Whether jobs are formal or informal seems less relevant. Firm dynamics matter. But we have a distorted picture of firm dynamics in developing countries. Cities are the engine of job creation. Employment opportunities are different along the rural-urban gradation 4

5 Overview Jobs take people out of poverty. But not all jobs involve an employer and an employee. Wage employment drives mobility. Whether jobs are formal or informal seems less relevant. Firm dynamics matter. But we have a distorted picture of firm dynamics in developing countries. Cities are the engine of job creation. Employment opportunities are different along the rural-urban gradation 5

6 Jobs are the main source of household income Source: Covarrubias and others 2012 for the WDR 2013

7 Jobs take households out of poverty Source: Inchauste and others 2012 for the WDR 2013

8 Jobs account for much of the decline in extreme poverty Source: Inchauste and others 2012 for the WDR 2013, Azevedo and others 2012 for the WDR 2013

9 Jobs get better with development

10 But what is a job?

11 A job does not always come with a wage

12 Overview Jobs take people out of poverty. But not all jobs involve an employer and an employee. Wage employment drives mobility. Whether jobs are formal or informal seems less relevant. Firm dynamics matter. But we have a distorted picture of firm dynamics in developing countries. Cities are the engine of job creation. Employment opportunities are different along the rural-urban gradation 12

13 Considerable occupational mobility exists across generations in India Sources: Based on India Human Development Survey (IHDS)

14 Occupational mobility is higher for younger population cohorts Sources: Based on IHDS

15 Occupational mobility has increased more for the most disadvantaged population groups in India Sources: Based on IHDS

16 Upward mobility in South Asian countries is similar to that in the United States and Vietnam Sources: Based on Dang and Lanjouw 2014 for this report and Dang, Lanjouw, and Khandker 2014 for this report. 16

17 Upward mobility is much stronger in cities than in rural areas in India Sources: Based on IHDS

18 Wage employment is associated with greater upward mobility in urban areas Sources: Based on data from Dang and Lanjouw 2014 for this report and Dang, Lanjouw, and Khandker 2014 for this report 18

19 Overview Jobs take people out of poverty. But not all jobs involve an employer and an employee. Wage employment drives mobility. Whether jobs are formal or informal seems less relevant. Firm dynamics matter. But we have a distorted picture of firm dynamics in developing countries. Cities are the engine of job creation. Employment opportunities are different along the rural-urban gradation 19

20 Job creation and destruction happen everywhere Source: WDR 2013 team based on Bartelsman, Haltiwanger, and Scarpetta (2009), and Shiferaw and Bedi (2010).

21 But enterprise surveys give us a distorted picture Household surveys Enterprise surveys Germany Chile Source: Li and Rama (2015).

22 The employment share of microenterprises is greater in developing countries

23 The dispersion of productivity across firms is much higher in developing countries United States China Argentina Ecuador Chile Bolivia Uruguay El Salvador India Mexico Source: Li and Rama (2015) productivity ratio between 90th percentile and 10th percentile of TFP distribution

24 Bigger firms pay higher wages than smaller ones and much more than microenterprises frequency (%) estimates, % wage difference, relative to microenterprises (%) wage premium, relative to microenterprise, % kernel = epanechnikov, bandwidth = Small Large Source: Li and Rama (2015).

25 percent percent But most jobs are created by microenterprises, among which there are very few gazelles Job creation and destruction based on enterprise surveys Chile Job creation and destruction reweighted by household surveys [0-5] [6-9] [10-49] [50-199] [>=200] firm employment size shares in job creation, % shares in job destruction, % shares in employment, % Source: Li and Rama (2015). 0 [0-5] [6-9] [10-49] [50-199] [>=200] firm employment size shares in job creation, % shares in job destruction, % shares in employment, %

26 Overview Jobs take people out of poverty. But not all jobs involve an employer and an employee. Wage employment drives mobility. Whether jobs are formal or informal seems less relevant. Firm dynamics matter. But we have a distorted picture of firm dynamics in developing countries. Cities are the engine of job creation. Employment opportunities are different along the rural-urban gradation 26

27 Job opportunities vary along the rural-urban gradation Employment shares (usual status for women aged 15 and above, ) Farming jobs fall sharply at around 5,000 inhabitants Jobs in factories and offices pick up much later Source: Chatterjee, Murgai and Rama (work in progress) 27

28 Productivity varies along the rural-urban gradation Big rural and small urban are almost indistinguishable The best performers are in small urban 0.5 Density DistrictXsize fixed effect, nominal consumption Less productive locations Household weights Rural, Rural, Urban, Urban, More productive locations Source: Based on Li and Rama (work in progress). 28

29 Top performers cluster well-defined spots Bottom performer(bottom 5%) Average performer Top performer(top 5%) No data Source: Based on Li and Rama (work in progress).

30 City size and city governance matter for performance Example: share of employment in manufacturing But city size and governance are correlated, so the analysis needs to take them into account together Source: Based on South Asia Spatial Database 30

31 Determinants of light intensity per capita Log. Light intensity per capita State Capital Municipal Corporation Industrial Township Municipality Notified Area More than 4 million 1-4 million 500,000-1 million Administrative and size category Base category: Administrative: Nagar Panchayat; Size: Less than 50, , ,000 50, ,000 Source: Based on South Asia Spatial Database 31

32 Determinants of household expenditure per capita log of district mean of per capita expediture in urban areas State Capital Municipal Corporation Industrial Township Municipality Notified Area More than 4 million 1-4 million 500,000-1 million Administrative arrangement and size category Base category: Administrative: Nagar Panchayat; Size: Less than 50, , ,000 50, ,000 Source: Based on South Asia Spatial Database 32

33 The rural-urban gradation and wage employment Share of wage employment State Capital Municipal Corporation Industrial Township Municipality Notified Area More than 4 million 1-4 million 500,000-1 million Administrative and size category Base category: Administrative: Nagar Panchayat; Size: Less than 50, , ,000 50, ,000 Source: Based on South Asia Spatial Database 33

34 Not all top urban performers are equally inclusive MLD District - Bhopal District - Lucknow District - Agra District - Nagpur District - Kolkata District - Faridabad Delhi District - Bangalore District - Mumbai Suburban District - Meerut District District - Pune District - Kanpur Nagar District - Chennai - Jaipur District - Varanasi District - Ahmadabad District District - Haora - Nashik District - Hyderabad District - Vadodara District - Thane District - Patna District - Indore District - Ludhiana District - Surat Location Premium Less productive and less inclusive Less productive but more inclusive More productive but less inclusive More productive and more inclusive nominal consumption based Source: Based on Li and Rama (work in progress).

35 Cities spread their prosperity to nearby locations Delhi Faiderabad - Jaipur Distance to a mega city (km) Rural, Rural, Urban, Source: Based on Li and Rama (work in progress).

36 But not all cities do so to the same extent Bangalore Distance to a mega city (km) Rural, Rural, Urban, Source: Based on Li and Rama (work in progress).