Employment–Growth Nexus in Uganda
Analysis with Error Correction Modelling
DOI:
https://doi.org/10.14738/abr.87.8463Keywords:
Key words: Employment Intensity of Economic Growth, Jobless Growth, Error Correction Model, Uganda.Abstract
Purpose–The purpose of the study is to examine the link between economic growth and employment growth in Uganda.
Methodology–The study adopts the causal relationship research design. Times series quarterly data for the period 2001-2018 are used to study the underlying relationship. Descriptive statistics are generated to describe data behavior and econometric models are developed to estimate short run and long run national employment intensities of economic growth. A single-equation based Engel-Granger two-step Error Correction Mechanism is used to estimate the coefficients of the empirical model.
Findings– Estimates reveal that whereas employment growth and economic growth show no causal link in the short run, the two variables show a positive and statistically significant causal link in the long run. The long run employment intensity of economic growth is however less than unity, suggesting that Uganda’s long run economic growth is not employment intensive.
Originality/value-The study results provide empirical evidence on the role of economic growth on employment creation in Uganda while unveiling evidence of jobless growth.
Practical implications- Results suggest that adopting pro-poor and growth inclusive interventions may be prudent for job creation for the Ugandan labour force.
References
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Akçoraoğlu, A. (2010). Employment, economic growth and labor market performance: the
case of Turkey. Ekonomik Yaklasim, 21, pp. 101–14.
Ali, A.A., Ghazi, T., & Msadfa, Y. (2018). Manufacturing Employment Elasticity and Its Drivers
in Developing and Emerging Countries: Focus on Sub-Saharan Africa (OCP Research Paper
No. 17/03). OCP Policy Centre, Morroco.
Basnett, Y., & Sen, R. (2013). What do empirical studies say about economic growth and job
creation in developing countries? Technical Report, Overseas Development Institute. Economic and Private Sector.
Bhorat, Haroon, & Oosthuizen (2006). “Evolution of the Labour Market 1995-2002.” In Haroon Bhorat
and Ravi Kanboor, eds., Poverty and Policy in Post-Apartheid South Africa. Cape Town: Human
Science Research Council.
Boltho, A., & AGlyn, A. (1995). Can Macroeconomic Policies Raise Employment? International
Labour Review, 134, 451-470.
Crivelli, E., Furceri, D., & Toujas-Bernaté, J. (2012). Can policies affect employment intensity
of growth? A cross-country analysis, IMF Working Paper WP/12/218, Washington D.C.
Döpke (2001). The "Employment Intensity" of Growth in Europe (Kiel Working Paper No. 1021),
Kiel Institute of World Economics, Germany.
Engle, R.F., & Granger, C.W.J. (1987). Co-integration and Error Correction: Representation,
Estimation and Testing. Econometrica, 55, 251-276.
Granger, C. W. J. (1969). Investigating Causal Relations by Econometric Models and Cross-
Spectral Methods. Econometrica, 37, 424-438.
Grant, E. (2014). Economic Development and Regional Integration in the East African
Community, Policy Analysis, Indiana University.
Goudie, A., & Paul, L. (1999): “Economic Growth, Poverty and Inequality”. Journal of
International Development, 11, 2, 177-195.
Gutierrez, C. et al. (2007). Does Employment Generation Really Matter for Poverty Reduction?
(World Bank Policy Research Working Paper No. 4432). World Bank, Washington D.C.
Herman, E. (2011). The Impact of Economic Growth Process on Employment in European Union
Countries. The Romanian Economic Journal, 14 (42):47-67
Ioan, D. (2014). Employment: Cause and Effect of Economic Growth. Procedia Economics
and Finance, 8, 268 – 274
ILO (1996). World Employment 1996/97: National Policies in a Global Context. International
Labour Office.
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ILO (2018). Employment-rich Economic Growth. Retrieved from: https://www.ilo.org/global/topics/dw4sd/themes/employment-rich/lang--en/index.htm
Islam (2004). The Nexus of Economic Growth, Employment and Poverty Reduction: An Empirical
Analysis (IEPDP Discussion Paper No. 14), ILO, Geneva.
Islam (2010). The Challenge of jobless growth in Developing Countries: An Analysis with Cross-
Country Data (BIDS Occasional Paper Series No.1), Dot Printing and Packaging, Dhaka,
Bangladesh.
Islam, I. & Nazara, S. (2000). Estimating Employment Elasticity for the Indonesian Economy,
(Technical Note on the Indonesian Labour Market), ILO.
Jamaladeen A., & Ibrahim, N. (2019). Economic Growth in India, Is It a Jobless Growth? An Empirical Examination Using Okun’s Law. The Indian Journal of Labour Economics, 62 (2), 307-317.
Johansen, S., & Juselius, K. (1990). Maximum Likelihood Estimation and Inferences on Cointegration with applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52, 169–210.
Kamgnia, B. (2009). Growth Intensity of Employment in Africa. A panel data Approach. Journal of Applied Econometrics and International Development, 9 (2):163-174.
Kapsos, S. (2005) The Employment Intensity of Growth: Trends and Macroeconomic
Determinants, (Employment Strategy Papers 12), ILO, Geneva.
Khan, A.R. (2007). Growth, employment and poverty: An analysis of the vital nexus based on
some recent UNDP and ILO/SIDA studies (DESA Working Paper No. 49
ST/ESA/2007/DWP/49), United Nations Department of Economic and Social Affairs.
Leshoro, T. (2014). Empirical Analysis of Employment Elasticity of Growth in Botswana.
Mediterranean Journal of Social Sciences, 5(2), DOI 10.5901/mjss.2014.v5n2p171.
Leyla, S., Kizu, T., & Godius, K. (2014). Labour market transitions of young women and men in
the United Republic of Tanzania (Work4 Youth Publication Series No. 26). ILO.
Loayza, N., & Raddatz, C. (2006). “The Composition of Growth Matters for Poverty
Alleviation,”. Mimeo, World Bank, Washington, D.C.
MacKinnon, J. G. (1996). Numerical Distribution Functions for Unit Root and Cointegration
Tests. Journal of Applied Econometrics, 11, 601-618.
Malmaeus, M. (2010): EC 6901 Kandidatuppsats i nationalekonomi: Potential consequences of
low or no economic growth in Canada and Sweden. Retrieved from
http://www.tillvaxtreflektera.se/Rapporter/Malmaeus_Econ_consequences_no_growth.pdf.
Manh, P., Ngoc, N., & Ha, D. (2014). Relationship between Economic Growth and
Employment in Vietnam. Romanian Economic Journal, 14 (42): 47-67.
Melamed, C., Hartwig, R., & Grant, U. (May, 2011). Jobs, growth and poverty: what do we
know, what don’t we know, what should we know? (Background Note), Oversees
Development Institute.
Misra, S., & Suresh, A.K. (2014). Estimating Employment Elasticity of Growth for the Indian Economy (RBI Working Paper Series No.6), Department of Economic and Policy Research, Reserve Bank of India.
MoFPED & ICC (2017). Accelerated and inclusive growth for sustainable development (High
Level Growth Forum Concept Note, 14-15 September 2017), Republic of Uganda.
Padalino, S., & Vivarelli, M. (1997). The Employment Intensity of Economic Growth in
the G-7 Countries. International Labour Review, 136, 191-213.
Phillips, P.C.B., & Perron, P. (1988). Testing for a Unit Root in Time Series Regression.
Biometrika, 75, 335–346.
Pini, P. (1997, January 16-18). Occupazione, Tecnologia e Crescita: Modelli Interpretativi ed
Eevidenze Empiriche a Livello Macroeconomico. Paper Presented to the Conference of the
Accademia Nazionale dei Lincei on “Sviluppo tecnologicoe disoccupazione: trasformazione
della societ”, held in Rome.
Rangarajan, C. (2006). Employment and Growth (Monograph 2/2006). Madras School of Economics,
Chennai.
Revenga, A.L, & Bentolila, S. (1994, September). What affects the Employment Rate Intensity of
Growth? Paper written for the CEPR conference on Unemployment Policy: How Should
Governments Respond to Unemployment?), Vigo, 24127.
Rifkin, J. (1996). The End of Work: The Decline of the Global Labour Force and the Dawn of
the Post-Market Era. New York: Penguin.
Sanusi, A.R. (2012, August). Macroeconomic Policy, Output and Unemployment Dynamics in Nigeria: Is There Evidence of Jobless Growth? (Paper presentation). 53rd Annual Conference of the Nigerian Economics Society, Nigeria.
Satchi, M., & Temple, J. (2006). Growth and Labour Markets in Developing Countries.
(Discussion Papers), Department of Economics, University of Bristol.
Sen, S. (2005, March 26th). India following America in jobless growth. India Daily, Internet
Edition.
Slimane, S. B. (2015). The Relationship Between Growth and Employment Intensity: Evidence
for Developing Countries. Asian Economic and Financial Review, 5(4):680-692.
Sodipe, O. A., & Ogunrinola, I. O. (2011). Employment and Economic Growth Nexus in Nigeria.
International Journal of Business and Social Science, 2 (11): 232-239.
Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. Journal of
Economics, 70 (1), 65-94.
Swane, A., & Vistrand, H. (2006). Jobless Growth in Sweden? A Descriptive Study. Being a Master's Thesis in International Economics and Business at Stockholm School of Economics.
Tejani, S. (2015). Jobless growth in India: An investigation. Cambridge Journal of Economics, 40(3) DOI: 10.1093/cje/bev025
UN (2014): Africa's economic growth failing to stimulate development and jobs. Retrieved from: http://www.theguardian.com/global-development/2014/jan/20/africa-economic-growth- failing-development-jobs.
UNDP (1993). Human Development Report1993, UNDP: New York.
Walterskirchen, E. (1999). The Relationship Between Growth, Employment and Unemployment
in the EU (European Economist for an Alternative Economic Policy Workshop), Barcelona,
Spain.
Wesseh, P.K., & Zoumara, B. (2012). Causal independence between energy consumption and
economic growth in Liberia: Evidence from a non-parametric bootstrapped causality test
Energy. Energy Policy, 50, 518–527.
Evidence from Malaysia, Philippines and Singapore. International Journal of Economics and
Finance, 2, DOI: 10.5539/ijef.v3n3p139
Adelman, I., & Morris, C.T. (1973): Economic Growth and Social Equity in Developing
Countries. Stanford University Press, Stanford.
AfDB (2018). Growth, Jobs and Poverty in Africa. Retrieved from: https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/2018AEO/African_Economic_Outlook_2018_-_EN_Chapter2.pdf
AfDB/OECD (2008). African Economic Outlook 2007/2008, OECD Publishing, Amazon.com.
Ajakaiye, O., Jerome, A.T., Nabena, D., & Alaba, O.A. (2016). Understanding the relationship between growth and employment in Nigeria. Retrieved from:
https://www.brookings.edu/wp-content/uploads/2016/07/growth-employment-nigeria-ajakaiye-jerome-nabena-alaba.pdf.
Akçoraoğlu, A. (2010). Employment, economic growth and labor market performance: the
case of Turkey. Ekonomik Yaklasim, 21, pp. 101–14.
Ali, A.A., Ghazi, T., & Msadfa, Y. (2018). Manufacturing Employment Elasticity and Its Drivers
in Developing and Emerging Countries: Focus on Sub-Saharan Africa (OCP Research Paper
No. 17/03). OCP Policy Centre, Morroco.
Basnett, Y., & Sen, R. (2013). What do empirical studies say about economic growth and job
creation in developing countries? Technical Report, Overseas Development Institute. Economic and Private Sector.
Bhorat, Haroon, & Oosthuizen (2006). “Evolution of the Labour Market 1995-2002.” In Haroon Bhorat
and Ravi Kanboor, eds., Poverty and Policy in Post-Apartheid South Africa. Cape Town: Human
Science Research Council.
Boltho, A., & AGlyn, A. (1995). Can Macroeconomic Policies Raise Employment? International
Labour Review, 134, 451-470.
Crivelli, E., Furceri, D., & Toujas-Bernaté, J. (2012). Can policies affect employment intensity
of growth? A cross-country analysis, IMF Working Paper WP/12/218, Washington D.C.
Döpke (2001). The "Employment Intensity" of Growth in Europe (Kiel Working Paper No. 1021),
Kiel Institute of World Economics, Germany.
Engle, R.F., & Granger, C.W.J. (1987). Co-integration and Error Correction: Representation,
Estimation and Testing. Econometrica, 55, 251-276.
Granger, C. W. J. (1969). Investigating Causal Relations by Econometric Models and Cross-
Spectral Methods. Econometrica, 37, 424-438.
Grant, E. (2014). Economic Development and Regional Integration in the East African
Community, Policy Analysis, Indiana University.
Goudie, A., & Paul, L. (1999): “Economic Growth, Poverty and Inequality”. Journal of
International Development, 11, 2, 177-195.
Gutierrez, C. et al. (2007). Does Employment Generation Really Matter for Poverty Reduction?
(World Bank Policy Research Working Paper No. 4432). World Bank, Washington D.C.
Herman, E. (2011). The Impact of Economic Growth Process on Employment in European Union
Countries. The Romanian Economic Journal, 14 (42):47-67
Ioan, D. (2014). Employment: Cause and Effect of Economic Growth. Procedia Economics
and Finance, 8, 268 – 274
ILO (1996). World Employment 1996/97: National Policies in a Global Context. International
Labour Office.
ILO (2005): World Employment Report. Geneva: ILO.
ILO (2018). Employment-rich Economic Growth. Retrieved from: https://www.ilo.org/global/topics/dw4sd/themes/employment-rich/lang--en/index.htm
Islam (2004). The Nexus of Economic Growth, Employment and Poverty Reduction: An Empirical
Analysis (IEPDP Discussion Paper No. 14), ILO, Geneva.
Islam (2010). The Challenge of jobless growth in Developing Countries: An Analysis with Cross-
Country Data (BIDS Occasional Paper Series No.1), Dot Printing and Packaging, Dhaka,
Bangladesh.
Islam, I. & Nazara, S. (2000). Estimating Employment Elasticity for the Indonesian Economy,
(Technical Note on the Indonesian Labour Market), ILO.
Jamaladeen A., & Ibrahim, N. (2019). Economic Growth in India, Is It a Jobless Growth? An Empirical Examination Using Okun’s Law. The Indian Journal of Labour Economics, 62 (2), 307-317.
Johansen, S., & Juselius, K. (1990). Maximum Likelihood Estimation and Inferences on Cointegration with applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52, 169–210.
Kamgnia, B. (2009). Growth Intensity of Employment in Africa. A panel data Approach. Journal of Applied Econometrics and International Development, 9 (2):163-174.
Kapsos, S. (2005) The Employment Intensity of Growth: Trends and Macroeconomic
Determinants, (Employment Strategy Papers 12), ILO, Geneva.
Khan, A.R. (2007). Growth, employment and poverty: An analysis of the vital nexus based on
some recent UNDP and ILO/SIDA studies (DESA Working Paper No. 49
ST/ESA/2007/DWP/49), United Nations Department of Economic and Social Affairs.
Leshoro, T. (2014). Empirical Analysis of Employment Elasticity of Growth in Botswana.
Mediterranean Journal of Social Sciences, 5(2), DOI 10.5901/mjss.2014.v5n2p171.
Leyla, S., Kizu, T., & Godius, K. (2014). Labour market transitions of young women and men in
the United Republic of Tanzania (Work4 Youth Publication Series No. 26). ILO.
Loayza, N., & Raddatz, C. (2006). “The Composition of Growth Matters for Poverty
Alleviation,”. Mimeo, World Bank, Washington, D.C.
MacKinnon, J. G. (1996). Numerical Distribution Functions for Unit Root and Cointegration
Tests. Journal of Applied Econometrics, 11, 601-618.
Malmaeus, M. (2010): EC 6901 Kandidatuppsats i nationalekonomi: Potential consequences of
low or no economic growth in Canada and Sweden. Retrieved from
http://www.tillvaxtreflektera.se/Rapporter/Malmaeus_Econ_consequences_no_growth.pdf.
Manh, P., Ngoc, N., & Ha, D. (2014). Relationship between Economic Growth and
Employment in Vietnam. Romanian Economic Journal, 14 (42): 47-67.
Melamed, C., Hartwig, R., & Grant, U. (May, 2011). Jobs, growth and poverty: what do we
know, what don’t we know, what should we know? (Background Note), Oversees
Development Institute.
Misra, S., & Suresh, A.K. (2014). Estimating Employment Elasticity of Growth for the Indian Economy (RBI Working Paper Series No.6), Department of Economic and Policy Research, Reserve Bank of India.
MoFPED & ICC (2017). Accelerated and inclusive growth for sustainable development (High
Level Growth Forum Concept Note, 14-15 September 2017), Republic of Uganda.
Padalino, S., & Vivarelli, M. (1997). The Employment Intensity of Economic Growth in
the G-7 Countries. International Labour Review, 136, 191-213.
Phillips, P.C.B., & Perron, P. (1988). Testing for a Unit Root in Time Series Regression.
Biometrika, 75, 335–346.
Pini, P. (1997, January 16-18). Occupazione, Tecnologia e Crescita: Modelli Interpretativi ed
Eevidenze Empiriche a Livello Macroeconomico. Paper Presented to the Conference of the
Accademia Nazionale dei Lincei on “Sviluppo tecnologicoe disoccupazione: trasformazione
della societ”, held in Rome.
Rangarajan, C. (2006). Employment and Growth (Monograph 2/2006). Madras School of Economics,
Chennai.
Revenga, A.L, & Bentolila, S. (1994, September). What affects the Employment Rate Intensity of
Growth? Paper written for the CEPR conference on Unemployment Policy: How Should
Governments Respond to Unemployment?), Vigo, 24127.
Rifkin, J. (1996). The End of Work: The Decline of the Global Labour Force and the Dawn of
the Post-Market Era. New York: Penguin.
Sanusi, A.R. (2012, August). Macroeconomic Policy, Output and Unemployment Dynamics in Nigeria: Is There Evidence of Jobless Growth? (Paper presentation). 53rd Annual Conference of the Nigerian Economics Society, Nigeria.
Satchi, M., & Temple, J. (2006). Growth and Labour Markets in Developing Countries.
(Discussion Papers), Department of Economics, University of Bristol.
Sen, S. (2005, March 26th). India following America in jobless growth. India Daily, Internet
Edition.
Slimane, S. B. (2015). The Relationship Between Growth and Employment Intensity: Evidence
for Developing Countries. Asian Economic and Financial Review, 5(4):680-692.
Sodipe, O. A., & Ogunrinola, I. O. (2011). Employment and Economic Growth Nexus in Nigeria.
International Journal of Business and Social Science, 2 (11): 232-239.
Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. Journal of
Economics, 70 (1), 65-94.
Swane, A., & Vistrand, H. (2006). Jobless Growth in Sweden? A Descriptive Study. Being a Master's Thesis in International Economics and Business at Stockholm School of Economics.
Tejani, S. (2015). Jobless growth in India: An investigation. Cambridge Journal of Economics, 40(3) DOI: 10.1093/cje/bev025
UN (2014): Africa's economic growth failing to stimulate development and jobs. Retrieved from: http://www.theguardian.com/global-development/2014/jan/20/africa-economic-growth- failing-development-jobs.
UNDP (1993). Human Development Report1993, UNDP: New York.
Walterskirchen, E. (1999). The Relationship Between Growth, Employment and Unemployment
in the EU (European Economist for an Alternative Economic Policy Workshop), Barcelona,
Spain.
Wesseh, P.K., & Zoumara, B. (2012). Causal independence between energy consumption and
economic growth in Liberia: Evidence from a non-parametric bootstrapped causality test
Energy. Energy Policy, 50, 518–527.
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Published
2020-07-13
How to Cite
TURYAREEBA, D., Ainomugisha, P., Mbabazize, R., Ssebbaale, E. M., Mulema, S., Wemesa, R., Wagima, C., & Bakaki, I. (2020). Employment–Growth Nexus in Uganda: Analysis with Error Correction Modelling. Archives of Business Research, 8(7), 39–57. https://doi.org/10.14738/abr.87.8463
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