purneshwaridevi
Purneshwari Devi
Employment creation is often modest, and should not be
the only policy concern
The magnitude of direct employment effects will generally be small,
especially over the short-term. This reflects the small average size of start-ups,
low enterprise survival and growth rates, displacement effects, and
deadweight in programme outcomes. Self-employment support programmes
in particular tend not to produce a large multiplier effect, because the selfemployed
do not hire large numbers of additional workers.
Policy-makers naturally wish to know who is recruited when new firms
are created. Do locals or non-locals fill vacancies? A typical figure from
metropolitan areas is that local residents fill around one in five new openings.
This ratio is sensitive to the occupational structure of employment growth and
the specific characteristics of local labour supply. A number of reasons are
described why individuals living in inner-cities might not be excluded from
jobs located in their own neighbourhoods, even when employers hold
negative views of inner-city residents as potential employees. A further
consideration regarding local employment impacts is that there is differential
mobility among persons with higher and lower levels of skills. This means
that, all things considered, vacancies that require high skills are more likely to
be filled by labour in-migration. Furthermore, the welfare effects of job
creation are unlikely to be the same for persons with different levels of skills.
For jobs at the lower end of the labour market it is probable that a larger share
of the wage represents a gain in welfare. So local projects that generate
employment for the under- and unemployed need not be justified solely in
terms of their redistributive impact: this impact is less likely to be curtailed by
labour in-migration, and could also be associated with relatively high gains in
economic efficiency.
the only policy concern
The magnitude of direct employment effects will generally be small,
especially over the short-term. This reflects the small average size of start-ups,
low enterprise survival and growth rates, displacement effects, and
deadweight in programme outcomes. Self-employment support programmes
in particular tend not to produce a large multiplier effect, because the selfemployed
do not hire large numbers of additional workers.
Policy-makers naturally wish to know who is recruited when new firms
are created. Do locals or non-locals fill vacancies? A typical figure from
metropolitan areas is that local residents fill around one in five new openings.
This ratio is sensitive to the occupational structure of employment growth and
the specific characteristics of local labour supply. A number of reasons are
described why individuals living in inner-cities might not be excluded from
jobs located in their own neighbourhoods, even when employers hold
negative views of inner-city residents as potential employees. A further
consideration regarding local employment impacts is that there is differential
mobility among persons with higher and lower levels of skills. This means
that, all things considered, vacancies that require high skills are more likely to
be filled by labour in-migration. Furthermore, the welfare effects of job
creation are unlikely to be the same for persons with different levels of skills.
For jobs at the lower end of the labour market it is probable that a larger share
of the wage represents a gain in welfare. So local projects that generate
employment for the under- and unemployed need not be justified solely in
terms of their redistributive impact: this impact is less likely to be curtailed by
labour in-migration, and could also be associated with relatively high gains in
economic efficiency.