Significance

People at work: persons involved in the production of goods and services. As production requires working time and human capital, firms and other organizations pay people, providing them with a key component of their income.

Particularly low national employment rates may signal a long-lasting depression and underdevelopment.

The kind of job of a person is one of the determinants of his belonging to social groups.

Composition

Employment can be expressed in number of people working or in total working hours. A mixed measure is the number of hours divided by standard working hours to give a full-time equivalence to jobs.

If considered in terms of the number of people, employment is purposefully divided along principal 8 axes:

1. economic activity, like agriculture, mining, manufacturing, services.
2. occupation, as with workers, clerks, managers, self-employed…
3. dimension of the employing organization (small, medium, large firms);
4. kind of legal contract, with its clauses regarding durability over time, method of remuneration, guarantees…;
5. level of wages and other remunerations;
6. age;
7. sex;
8. education.

Along their professional life, people are hired, change job (internally or externally to their organization) and finish their career. In many countries, they thus become pensioners and receive pensions from Social Security or private funds. Accordingly, important events for employment dynamics are hiring, firing and retirement.

It's also important to monitor whether groups of workers face unhealthy conditions, too long working hours, sexual harrassment, and other humiliating conditions. An assessment about Filipino domenstic workers overseas is here.

Determinants

In a macroeconomic perspective, levels of employment depend on levels of economic activity (broadly measured by GDP) and on intensity of labour per unit of product (productivity).

An important role is played by institutional arrangements (as laws, contracts and collective negotiations) on how to react to slow-downs in GDP.

Employment in a certain activity may be ceiled up by the number of employable skilled people and by timing of vocational training.

General population dynamics is a very broad framework for employment and should not be used as a proxy for its dynamics, since demographic variables are extremely slow in changes, whereas employment reacts to economic climate.

The relationship with wages is twofold: higher wages may reduce the incentive for firms to employ but, conversely, high employment may give more power to employees in wage negotiations, thus increasing their remuneration.

Impact on other variables

High levels of employment rate and longer working hours mean, also at the same wages, a larger income for employee. Income distribution gets more equitable with a sharp reduction of poverty.

Working conditions usually improve and people have confidence in maintaining their jobs and even getting better ones. This perspective is conducive to investment in human capital.

As we said, in this environment it is likely an increase of wages. Consumption of employee will be boasted but global consumption may follow a slower path if reduction in other income source takes place. Global consumption depends on consumption/saving attitude of different social groups and their income share.

Long-term trends

Employment has always grown, but at a very different pace according to countries. Where its growth has been the highest, reduced productivity growth have usually kept GDP dynamics low (often from an already low level). Where its growth has been the lowest, productivity has usually (but not always) been high with a relatively good GDP performance (often from an already high level). In between these two extremes, employment growth has been matched with any other situation.

In many countries, employment has followed short-term GDP dynamics, especially in prolonged recessions when a fall in employment takes place, with more moderate growth than GDP along growth path in the long-term, because of increases in productivity.

In other countries, employment has been static at the same level for some decades, with GDP dynamics mirroring itself only on productivity.

Business cycle behaviour

At the beginning of recession, overhead hours usually fall, reducing average received wages because overhead are typically much better paid than normal hours. Employment is static for a more or less long period after recession has begun, because of institutional arrangements (as contracts) and of the fact that firms forecast that the recession will be short: they are unwilling to dismiss people since they will soon need the same workers in the future, the more so as these employees have specific skills that would be necessary to build if a completely new personnel would be hired.

As recession hits harder, perspectives gloom, and strategic decisions on restructuring take places: the number of firing rises dramatically.

It is often in this case that a fall in employee consumption is not counterbalanced by an increase of other groups' consumption, since also they are touched by recession. Through the Keynesian multiplier, recession worsen.

With recovery, firms exploit better their production capacity and personnel, thus GDP can growth without new employees and machines.

Employment starts growing when the perspective of growth are consolidated and firms urgently need new personnel.

At peaks, in many activity branches, a shortage of personnel may be felt and employment increases less than it could otherwise.

Data

2004 employment levels and trends in all countries of the world
Industry-level US data
Data for all the variables in IS-LM model
EU data for all the variables in IS-LM model (Germany, France, Italy, Spain, UK, Switzerland and other 13 European countries)
Daily time spent on different activities by employment status, sex, and age
Women and the economy in India
Gender-specific labour statistics
An in-depth description of 1500 job profiles
Empirical survey on vacancies

Formal models

An interactive map of how the economy works according to a basic macroeconomic scheme: the IS-LM model

Labour market in Peru: the transition path from unemployment to employment and the reverse

The economics of ex ante coordination