Unbearable Costs: When Is Inflation Impeding Job Creation? Evidence from Sub-Saharan Africa / Ibrahima Camara, Rasmané Ouedraogo, Amadou Sy.

Format:

Book

Government document

Author/Creator:

Camara, Ibrahima.

Contributor:

Ouedraogo, Rasmané.

Sy, Amadou.

Series:

IMF Working Papers; Working Paper ; No. 2023/046

IMF Working Papers

Language:

English

Physical Description:

1 online resource (32 pages)

Other Title:

Unbearable Costs

Place of Publication:

Washington, D.C. : International Monetary Fund, 2023.

Summary:

Covid-19 and war-induced commodity price fluctuations, and broadening price pressures have led to a surge in inflation in many sub-Saharan Africa (SSA) countries. To adjust to increasing costs, firms have resorted to several measures including shuttering offices, reducing businesses, laying off, and freezing hiring, thus putting at risk job creation and raising concerns of youth unemployment. This paper explores the effects of inflation on private employment growth in SSA using a large firm -level dataset from the World Bank’s Enterprise Surveys. We find a non-linear relationship between inflation and job creation in SSA, with job creation being negatively correlated with inflation rate when the latter is above 14 percent. This finding holds regardless of the sector of activities of firms and the exchange rate regime. In addition, the paper finds some differential effects based on the type of products. An increase in fuel prices tends to be more detrimental to job creation than food prices. The study also provides evidence that the state of implementation of structural reforms matters. The results show that inflation reduces job opportunities mostly in countries with bad or no structural reforms.

Notes:

Description based on print version record.

ISBN:

9798400235054