The Employment Impact of Differences in Dmand and Production

million workers, giving a net employment growth of 0.6 million workers over the whole period.
France presents an exceptional case, as the only country to have experienced negative
employment growth, a net loss of 0.4 million workers over the period as a whole. Final demand
at its 1977 mix would have driven down the level of employment by 1.6 million workers, while
the shift in the mix, increasing employment by 1.2 million, provided only a partial offset. For the
European economies, therefore, against the background of their sluggish employment growth,
the shifting mix of final demand has made a relatively important contribution. But for the US,
where employment growth has been buoyant, the contribution has been unimportant.

The composition of the alternative demand vectors and therefore their effect on employment is
influenced by the changes in the relative price of products over time. Relative prices tend to rise
in industries with lower productivity growth; to the extent that demand has also been growing
more rapidly there, e.g. in Services, the two effects will be mutually reinforcing, increasing the
demand share. When the analysis is re-run at constant prices (right panel in Table 5) the
employment-friendliness of demand shifts for the European economies remains. In Germany
relative prices have had no additional effect, and the strong impact of the demand shifts is
unaltered. The UK and France show a reduced effect, as might be expected, but in the
Netherlands the estimated effects are strengthened, mainly due to the shifts in the
Manufacturing mix. After controlling for relative prices the changing demand mix has no effect
on employment in the US; the effect of each of the individual shifts is small, and in the aggregate
offsetting.

Table 6 shows the results of the same analysis applied to household consumption. The figures
given are the percentage changes in the employment generated by consumption expenditure.
They can be converted to changes in total employment by multiplying by the share of total
employment generated by consumption (US 0.7, UK 0.5, Germany 0.46, France 0.48, the
Netherlands 0.33, and Spain 0.53). ¹⁰

See Table 6

The percentage changes in the total employment of the late 1990s attributable to the changing consumption mix,
at current prices, would be -0.81, 1.1, -1.45, 1.8, 0.43 and 0.27 in the US, UK, Germany, France, the Netherlands
and Spain, respectively.

22

<<   24   25   26   27   28   29   30   >>

More intriguing information