Measuring the economic growth using employment quality parameters – an econometric approach

Abstract

The classic model of economic growth is described by GDP, employment rate for working-age individuals, unemployment rate and the labour cost index. This paper aims to present a changing of the paradigm to measure the effect on the economic growth of only the classical factors (indicators) with elements of employment quality. For this purpose will be used an econometric analysis – Vector Autoregressive model. The quarterly data used for Romania is provided by official statistics. The software used for the analysis is R Project, with the package vars. The classic model could be replaced by a new model which includes GDP, employment rate for people aged 15 and more, social productivity, NEETs rate, and rate of early leavers from education and training for individuals aged 15-24. Hence, the proposed model encloses new components, mainly the youth’s performance in employment and their interest in education and employment and the active ageing. The need for such a model is based on some statistical insights of Active Ageing Index, NEETs rates and early leavers from education and training rates. The proposed model is multivariate; therefore, all the variables are addressed simultaneously, and is meant to explain the behaviour of a variable based on its past and other variables. Based on the results, the study will underline some important policy that could be implemented.

Keywords

• Economic growth; Employment; GDP; Vector Autoregressive model; NEETs; Active ageing