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The Dynamics of Job Creation and Job Destruction in an African Economy: Evidence from Ethiopia
Shiferaw, Admasu Bedi, Arjun S.
Shiferaw, Admasu
Bedi, Arjun S.
Abstract
A growing share of manufacturing in GDP and in employment is a common feature observed in successful developing countries. Manufacturing, however, has not been a major source of employment in Ethiopia and in other Sub-Saharan African countries. This paper relies on a unique census-based panel data covering the period 1996–2007 to analyse the micro-dynamics of aggregate employment changes. The analysis shows that the weak employment performance of Ethiopian manufacturing is not due to limited job creation but a consequence of simultaneous offsetting processes of job creation and destruction. We find strong evidence of intra-industry job mobility and attribute a substantial proportion of job creation and destruction to firm entry and exit. However, jobs created by small firms tend to be transitory and there has been a re-allocation of jobs from small to larger firms during periods of faster aggregate net employment growth. Overall, the evidence suggests that employment growth and job re-allocation are not necessarily restrained by labour laws and regulations.
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2013-11-01
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Economics
DOI
https://doi.org/10.1093/jae/ejt006