What Explains the Job Creating Potential of Industrialisation in the Developing World?

Kunal Sen

2017

This paper examines why job creation in the manufacturing sector has differed widely across developing countries, using a modified Lewis model that captures the scale, composition and labour intensity effects of industrialisation on job creation. We show that while the scale effect has been mostly positive, labour intensity and composition effects have been mostly negative. Trade integration has a positive impact on manufacturing employment via the scale and composition effects, but a negative impact via the labour intensity effect. Human capital has a positive effect via the labour intensity effect. Labour regulations have no impact through any of the effects.

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