Employ Young People For Growth And To Reduce Inequality
Rising economic growth has reduced inequality in low-income and emerging market countries over the years. In good economic times, young people working helps reduce inequality in both groups of countries. But when growth slows down and jobs are lost, more young people out of work in low-income countries leads to a rise in inequality. In emerging markets, the story is a bit different.
In good times, reduced unemployment explains about 41% of reduction in inequality in low-income and emerging market economies. Young people working more explains about over one-third of this reduction. In bad times, 28% of increase in inequality is due to an increase in unemployment. Thus, the increase in unemployment among young people is the main contributor to the rise in inequality. This difference could be due to even higher levels of self-employment and informality in low-income countries.
Two policy implications comes out of the above which are as -
1) The quality of jobs created and policies to support employment are important to reduce inequality
in low-income and emerging market countries.
2) Reforms to the structure of country's economy to boost productivity and long term growth should
design policies that reduce big differences in the distribution of income.
And, since the big quantum of effect of growth on inequality comes from youth unemployment, Govt
should design policies to increase the employability of younger workers and reduce heir vulnerability to economic downturn. Young people have the highest debt relative to their assets of any age group. This means that they are more vulnerable to financial shocks. In essence, they are putting their dreams on hold. But, incomes are only part of the story, poverty is the other.
So, the Policymakers should work on some ideas, given here under, which can help reduce inequality
and poverty.
1) Have a look at the Labor market - To create jobs and incentivize work, policy makers can reduce
Social Security contributions and taxes on low wage workers. To help improve future job
prospects, Govt. can invest in education and training, which can help young people close skill gap.
2) Countries can make Govt. spending on Social Protection more effective.To adapt social spending,
especially unemployment and other non- pension benefits, to ensure young people are better
protected in event of job loss.
3) Taxes - In some countries, more progressive tax systems and wealth tax (including Inheritance
Tax) could help fund me\much-needed social programs for younger citizens.
This is not about one age one group Vs. another. Building an Economy that works for the younger people creates a stronger foundation for every one. Young people with productive careers can contribute to social safety nets. Reducing inequality across generations goes hand-in-hand with creating sustained growth and rebuilding trust within the society.
None of this is easy. Policies need to be tailored to the needs of individual countries, recognize Political realities and stay within the Budget.
----------------------
In good times, reduced unemployment explains about 41% of reduction in inequality in low-income and emerging market economies. Young people working more explains about over one-third of this reduction. In bad times, 28% of increase in inequality is due to an increase in unemployment. Thus, the increase in unemployment among young people is the main contributor to the rise in inequality. This difference could be due to even higher levels of self-employment and informality in low-income countries.
Two policy implications comes out of the above which are as -
1) The quality of jobs created and policies to support employment are important to reduce inequality
in low-income and emerging market countries.
2) Reforms to the structure of country's economy to boost productivity and long term growth should
design policies that reduce big differences in the distribution of income.
And, since the big quantum of effect of growth on inequality comes from youth unemployment, Govt
should design policies to increase the employability of younger workers and reduce heir vulnerability to economic downturn. Young people have the highest debt relative to their assets of any age group. This means that they are more vulnerable to financial shocks. In essence, they are putting their dreams on hold. But, incomes are only part of the story, poverty is the other.
So, the Policymakers should work on some ideas, given here under, which can help reduce inequality
and poverty.
1) Have a look at the Labor market - To create jobs and incentivize work, policy makers can reduce
Social Security contributions and taxes on low wage workers. To help improve future job
prospects, Govt. can invest in education and training, which can help young people close skill gap.
2) Countries can make Govt. spending on Social Protection more effective.To adapt social spending,
especially unemployment and other non- pension benefits, to ensure young people are better
protected in event of job loss.
3) Taxes - In some countries, more progressive tax systems and wealth tax (including Inheritance
Tax) could help fund me\much-needed social programs for younger citizens.
This is not about one age one group Vs. another. Building an Economy that works for the younger people creates a stronger foundation for every one. Young people with productive careers can contribute to social safety nets. Reducing inequality across generations goes hand-in-hand with creating sustained growth and rebuilding trust within the society.
None of this is easy. Policies need to be tailored to the needs of individual countries, recognize Political realities and stay within the Budget.
----------------------
Comments