The role of employment-intensive growth in reducing unemployment rates in Egypt during the period (1980-2018)

This research aims to analyze the relation between GDP growth and employment growth as a means to reduce unemployment rates in Egypt, through studying the relation between employment and economic growth in economic literature; then by conducting a descriptive analysis of the development of the relation between them in Egypt during the period (1980-2018); and ending with using an econometric method to estimate the elasticity of employment to output growth in Egypt in the long-run and the short-run during the study period. Co-integration analysis and the associated Error Correction Model (ECM) were applied, to estimate the Auto Regressive Distributed Lag Model (ARDL).
The econometric analysis revealed that long-run elasticity of employment to output growth is positive and less than one (0.22); this result agrees to a large extent with Okun's law. Also, the value of elasticity of productivity to output growth (0.78) is greater than that of employment elasticity, which confirms that output growth during the study period was mainly due to productivity growth. The results also showed that employment was inelastic to output growth during the study period, mainly due to the structural imbalances that the Egyptian labor market suffered from between the supply and demand sides of labor. Finally, the study recommended the need to focus on increasing the value of investments directed to labor-intensive activities, and also those directed to the service sector, due to its high labor absorption capacity.