Running some basic statistical tests shows that the rise of GDP and the fall of unemployment are highly correlated in China, dispelling London School of Economics professor Keyu Jin's controversial assertion that China's economic growth has had little impact on the employment situation.
The standard narrative about the modern China is dominated by its meteoric economic growth trajectory. Unlike other growth stories – where economies soar but people don’t reap the gains – Chinese growth is thought to have had a major impact on well-being: higher life expectancy, social and economic mobility, and improved quality of life (with the important exception of people’s natural environment). Most importantly, the accepted wisdom is that growth gains have translated into more jobs for Chinese people.
Attempting to debunk the general perception, London School of Economics professor Keyu Jin made a provocative argument recently in The Japan Times:
“In fact, one of the most baffling features of China’s economic rise is that, even amid double-digit GDP growth, employment grew at a measly 1.8 percent average annual rate from 1978 to 2004.”
So is Dr. Jin right? Have we all been duped by a giant myth about Chinese job creation? The short answer is no.
Much is problematic about her statement. The first point is a matter of arithmetic. Assuming that year-to-year growth is always positive, even a very small but constant annual growth can compound to a significant gain. Say, for example, a country began with an employment rate of 90 percent (10 percent unemployment). Annual employment growth of only 0.5 percent will generate full employment in less than 20 years. Jin conjures a misleading image by juxtaposing a small number (average gains in employment) with a much bigger one (growth in GDP).
The other unstated implication of Jin’s statement is that the staggering and sustained gains in Chinese GDP growth have been of little consequence for the country’s unemployed. Does this add up when we look at the figures? Let’s look at China’s unemployment rate between 1992 and 2013 and the corresponding growth in real GDP.
Running some basic statistical tests shows that the rise of GDP and the fall of unemployment are highly correlated in China,[i] dispelling Jin’s controversial assertion that China’s economic growth has had little impact on the employment situation.
Jin goes on to advance another very counter-intuitive claim: that China’s focus on manufacturing has been the reason why “households […] have largely missed out on the benefits of economic development in China.” Again, numbers do not support her claim: industry’s share of total employment went up from 18 percent in 1980 to more than 29 percent in 2011. This can only happen if industries were growing and adding more jobs.
She advocates a greater focus on the services sector arguing, correctly, that services account for the bulk of employment in developed economies. Indeed, even in China services account for the bulk of employment, at about 38 percent in 2011. The point Jin fails to mention is China’s remarkable growth was built and sustained on exports and international trade. Services in emerging economies are typically non-tradable, meaning growth in that sector is driven by domestic consumption. China can now shift its attention to services, but only because it used manufacturing jobs to build a large domestic market it didn’t have 30 years ago.
One of contemporary China’s great success stories – replicate with uncertain success.
[i] For the record: the two are negatively correlated with a correlation coefficient of almost 0.7. A regression analysis on the same data set reveals that a 1 percent growth in real GDP leads to more than 5 percent decrease in unemployment rate (numbers that are statistically significant).
On 10 February, the Rajasthan government announced that it would introduce the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023. The draft bill, accessed by The Quint, envisages a social security and welfare board for platform-based workers.
Just bringing more women into the labour market isn’t enough. Whether the work provides pathways for professional growth, the quality and conditions of work are also critical considerations if we want to reap the economic and social benefits of women’s participation in the labour force
India must push the G20 to take pre-emptive action, rather than just react, by prioritising two key challenges confronting much of the Global South. It must address growing debt burdens, and prioritise financial and technical assistance to build viable social security systems
Regardless of whether one is pro moonlighting or opposed to it, the raging debate over the issue signals a clash between traditional notions of employment, and an emerging world of work where flexibility reigns supreme
In a nation devoted to powerful goddesses, the average Indian woman still struggles to realize her potential. From normative social restrictions and concerns about physical safety to the disproportionate burden of domestic responsibilities, day after day, generation after generation, in big ways and small, our women confront multiple barriers.
Recent discontent in Uttar Pradesh (UP) and Bihar has been manifesting in a different kind of collective action: ‘job riots’. Perhaps this is unsurprising, given the employment crisis that plagues India, but the crisis in UP is in the spotlight because the state is in the throes of a high-stakes election.
With 1.4 billion people, India is well on its way to becoming the world’s most populous country, beating China. Our youth population alone is larger than the total population of the US, or that of any other industrialized country. It is understandable then that a quest to achieve scale is among the top priorities of the government’s development interventions.
Ian Goldin, Professor of Globalisation and Development at the University of Oxford, in conversation with Sabina Dewan on the likely length and depth of the economic crisis induced by COVID-19, and the steps that are necessary now to ensure that the economic recovery leads to more resilient economies, livelihoods, and communities.