Unbearable Costs: When Is Inflation Impeding Job Creation? Evidence from Sub-Saharan Africa

Unbearable Costs: When Is Inflation Impeding Job Creation? Evidence from Sub-Saharan Africa
READ MORE...
Volume/Issue: Volume 2023 Issue 046
Publication date: March 2023
ISBN: 9798400234347
$20.00
Add to Cart by clicking price of the language and format you'd like to purchase
Available Languages and Formats
paperback else
pdf else
epub else
English
Prices in red indicate formats that are not yet available but are forthcoming.
Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Labor , Inflation , Economics- Macroeconomics , Economics / General , Inflation , Jobs , reforms , sub-Saharan Africa , broadening price pressure , evidence from Sub-Saharan Africa , Survey dataset , firm assessment , rising prices , Job creation , Exchange rate arrangements , Employment

Summary

Covid-19 and war-induced commodity price fluctuations, and broadening price pressures have led to a surge in inflation in many sub-Saharan Africa (SSA) countries. To adjust to increasing costs, firms have resorted to several measures including shuttering offices, reducing businesses, laying off, and freezing hiring, thus putting at risk job creation and raising concerns of youth unemployment. This paper explores the effects of inflation on private employment growth in SSA using a large firm -level dataset from the World Bank’s Enterprise Surveys. We find a non-linear relationship between inflation and job creation in SSA, with job creation being negatively correlated with inflation rate when the latter is above 14 percent. This finding holds regardless of the sector of activities of firms and the exchange rate regime. In addition, the paper finds some differential effects based on the type of products. An increase in fuel prices tends to be more detrimental to job creation than food prices. The study also provides evidence that the state of implementation of structural reforms matters. The results show that inflation reduces job opportunities mostly in countries with bad or no structural reforms.