Estimating employment elasticity in Jordan

Abstract EN

This paper aims to estimate the margin of employment elasticity in Jordan with regard to some macroeconomic variables: the gross domestic product, capital expenditure and current expenditure.

Elasticity is measured using two ways, the simple arc calculation, and the economy ic model using annual time series data for the period (1980-2014).

Data is analyzed by using proper economic modelling and proper diagnostics for stationarity and spurious regression.

Based on the tests results, cointegration analyses are applied.

Results confirm the existence of the long-run equilibrium relationship between employment and GDP.

It was found to be positive that employment responds to changes in GDP growth by a value of 0.48.

Results also show that elasticity of employment to capital and current expenditures are both positive in favour of the capital expenditure (0.77) compared to (0.54).

This provides clear evidence that capital accumulation and current expenditure could be used as tools to increase employment in Jordan by increasing jobs created in the economy and spurring the aggregate demand in Jordan.