OECD JOB CREATION

Job creation continues to be one of the most important issues facing OECD economies. The traditional focus on net employment growth hides much of the dynamics of employment creation: regardless of whether net employment is increasing or declining, large numbers of jobs are being created as well as destroyed. For the OECD nations for which data are available, total turnover averaged more than twenty per cent during the 1980s, although net employment growth was generally in the range 0.5 -2 per cent. In other words, each year an average of one in five jobs changed.
Zero net employment growth can mask significant job gains and losses. Industries with declining employment can have significant job creation while industries with growing employment can have significant job losses. The purpose of this paper is to examine the dynamics of employment growth, job gains and job losses, with a view towards a better understanding of recent developments underlying employment growth in the 1980s and expected trends in the 1990s.
An important distinction which will be made during most sections of the paper is that between the influence of cyclical factors and structural forces. These are important influences on net employment growth, ergo their influence on the full range of labour turnover is equally important. In its last review of the issue, OECD (1987) placed a strong emphasis on the relationship between structural change and the process of job creation and job loss and some of the findings or conclusions drawn at this time will be further explored.
The paper begins with an overview of the process of employment turnover and its components in section B. This is followed in Section C by a review of recent literature. This includes the influence of the business cycle on job gain and loss and the potential effects of structural change. The analysis undertaken is presented in Section D while section E concludes the paper with some policy implications stemming from the research.