How many jobs created per 1% of GDP?

HAMISH_MCTAVISH

CLAPTON wrote: »

If I understand the question properly.

It's clear true that GDP can and does increase without any increase in jobs.

Basically, increases in productivity; new inventions etc can increase total production without increasing jobs.

Yes, that is possible.

But it's unlikely to do so very often for sustained periods of time.

Most of the time, when GDP rises it correlates with a decrease in unemployment, and when GDP falls it correlates with an increase in unemployment.

(in absolute numbers, if population is also growing then in percentage terms it may in theory stay similar)

During the current recession we have seen GDP fall without large reduction in manpower (i.e. a fall in productivity)..

Well there are still a million or more extra people unemployed.

So my question is really angling towards how soon would we expect unemployment to fall as GDP growth continues to recover, and what level of growth will be required to get unemployment back to a sensible level of say, sub 5%.

CLAPTON

I would say that the trend increase in per capita GDP shows that GDP in general can and does increase with a static population.

That would seem to be the case since the war.

Over short period of time then it would be reasonable to assume that an increase in GDP would correlate with an increase in employment but of course government actions can heavily influence any such relationship.

It's difficult to predict what will happen when we start growing again as increased production may well be met by increasing hours worked rather than taking on new workers.

HAMISH_MCTAVISH

CLAPTON wrote: »

Over short period of time then it would be reasonable to assume that an increase in GDP would correlate with an increase in employment

Agreed.

but of course government actions can heavily influence any such relationship.

Government, market forces, changing trends and technologies...

Many things.

It's difficult to predict what will happen when we start growing again as increased production may well be met by increasing hours worked rather than taking on new workers.

At first, very possible.

However developed economies seem to trend towards 5% or under unemployment being seen as healthy and desirable.

"Full" employment being inflationary, and more than 5% being too much in the way of unemployed.

dryhat

Do people actually regard these figures as being significant in any way?

How strange.

grizzly1911

dryhat wrote: »

Do people actually regard these figures as being significant in any way?

How strange.

Pareto works for some.

CLAPTON

dryhat wrote: »

Do people actually regard these figures as being significant in any way?

How strange.

There are millions of stories. GDP tells three of them
why don't you add yours?

Thrugelmir

dryhat wrote: »

Do people actually regard these figures as being significant in any way?

You need to compare sector to sector to make meaningful sense. Not just look at media headline numbers which hide a multitude of variations.

ILW

HAMISH_MCTAVISH wrote: »

Yes, that is possible.

But it's unlikely to do so very often for sustained periods of time.

Most of the time, when GDP rises it correlates with a decrease in unemployment, and when GDP falls it correlates with an increase in unemployment.

(in absolute numbers, if population is also growing then in percentage terms it may in theory stay similar)



Well there are still a million or more extra people unemployed.

So my question is really angling towards how soon would we expect unemployment to fall as GDP growth continues to recover, and what level of growth will be required to get unemployment back to a sensible level of say, sub 5%.

I would suspect unemployment is unlikely to drop to sub 5% whilst we have totally open borders to much poorer nations with much higher historic unemployment rates.

HAMISH_MCTAVISH

ILW wrote: »

I would suspect unemployment is unlikely to drop to sub 5% whilst we have totally open borders to much poorer nations with much higher historic unemployment rates.

It was only slightly above 5% even after many years of "open borders".

Immigration has been proven not to materially increase the unemployment rate amongst the native born.

Generali

HAMISH_MCTAVISH wrote: »

Quite.

Surprised if it would be as linear as that, given the changes to productivity over time, and differing labour intensity of different sectors of the economy which are more or less likely to grow post-recession.

Hence the question.

Conventional economic theory has it that as you employ more people, their marginal productivity declines. The reason? You employ the best people first and the street drunks last. As you get towards the street drunks end of things, you are employing people who are less productive so will get less additional output from them, indeed you might even get less output in total if you employ someone useless enough.

The reality isn't that simple of course. A hairdresser or waitress isn't very productive because no matter how good you are there are only so many heads you can cut or plates of food you can serve up. An aluminium smelter can produce millions of dollars worth of output with a couple of dozen people The latter is more capital intensive and the former less so.

By looking at the labour side only, we're only looking at part of the picture.