Long‐term employment intensity of sectoral output growth in Tunisia

• Author: Mohamed GOAIED,Seifallah SASSI
• Date: 01 June 2016
• DOI: http://doi.org/10.1111/j.1564-913X.2015.00034.x
• Published date: 01 June 2016

International Labour Review, Vol. 155 (2016), No. 2

Copyright © The authors 2016

Journal compilation © International Labour Organization 2016

* Laboratory of Applied Economics and Finance, University of Carthage, Tunisia, email:

seifallah.sassi@yahoo.fr (corresponding author). ** College of Business and Economics, Qatar

University, Qatar, email: mohamed_goaied@yahoo.fr.

Responsibility for opinions expressed in signed articles rests solely with their authors, and

publication does not constitute an endorsement by the ILO.

Long-term employment intensity

of sectoral output growth in Tunisia

Seifallah SASSI* and Mohamed GOAIED**

Abstract. This article examines the long-term ability of Tunisian industries to

generate employment opportunities. Using a panel data set of 15 industries over

1983 –2010, the authors estimate their long-run output–employment elasticities,

using the “mean group” estimator. They argue that economic policy should tar-

get the most labour-intensive industries, particularly service industries and export

manufacturing industries. After demonstrating the inability of the mining industry

to absorb labour, the authors highlight the long-run jobless growth in the hotel,

bar and restaurant industry and suggest that future investment in this industry

will yield no results and that future tourism policy should focus rather on para-

tourism activities.

In 2011, Tunisia underwent a historic revolution, following a 23-year regime

during which the country achieved high economic growth which did not,

however, translate into jobs; indeed, the high rate of unemployment – 18.9 per

cent in 2011 – was the main economic factor behind the revolution. The disap-

pointing economic model in Tunisia with regard to employment has been il-

lustrated by the jobs crisis since the 2000 s. Although most industries achieved

economic growth in the previous three decades, this was not accompanied by

job creation in the long term; high growth itself does not automatically lead

to reduced unemployment. Tunisia’s unemployment was high because the rate

of job creation was insufcient and the quality of jobs created remained low

(World Bank, 2014). This article aims to provide an empirical investigation

into the long-term ability of 15 industries in Tunisia, including agriculture, to

generate jobs. We attempt to explain the low level of national job creation by

examining sectoral employment intensities – in other words, the ratio of em-

ployment growth to output growth in the different industries considered.

In developing economies, while economic reforms may boost economic

growth through high rates of labour productivity, this can lead to job losses