[OPE] Employment outlook

Hi Michael,

A 1% increase in employment earning world average wages is of course
unlikely cause an increase of 5% in world gross product (at the world
aggregate level, GDP and GNI or GNP are identical, except if you work for
the World Bank and value GDP differently from GNI). You have to factor in
demographics and the fact that a large chunk of the population growth occurs
in poor countries, plus the difference between nominal and ppp valuations. I
ran out of time for a better estimation procedure.

I don't think though that a 1% increase in employment at average wages
necessarily translates into a 1% increase in world gross product - it
depends I guess a bit on what average you have in mind.

My idea is that world GDP will grow in part simply because of the natural
increase of the population, given a relatively constant
employment-to-population ratio - this however says nothing about GDP per
capita; GDP per capita could reduce even as world GDP increases. But in
order to estimate the effect on total consumer demand of the natural
increase of the world population, I would have to try for a much better
estimation procedure.

Market expansion under conditions of relatively stagnant personal incomes
does not absolutely require that more people are integrated in markets; if
well-off people spend more of their income on final goods and services,
markets will also grow, for example. Right now though they tend to save
more, in aggregate.

Jurriaan

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Received on Tue Jan 11 11:52:32 2011