Employment intensity and Sectoral Output Growth: A Comparative Analysis of Egyptian and Jordanian economies

Abstract

The purpose of this article is to assess the relationship between employment intensity and sectoral output growth, to examine whether economic growth was jobless or has created more jobs. Using panel data for 10 sectors over the period 1983-2010 for two Middle Eastern countries; Egypt and Jordan, we estimate employment-value added elasticities at the sectoral level using a random coefficient estimation technique. Our main findings show that while manufacturing is the most important sector that creates jobs in Egypt, services are more important in Jordan. For both countries, the mining sector is insignificant. Indeed, this shows to what extent this sector is capital intensive, does not have a significant value-added and thus does not create jobs. A more detailed look at the decomposition analysis shows that the contribution of employment growth to value-added was higher than that of labor productivity. For Jordan, its growth was mainly attributed to employment growth while its productivity growth was negative.