Abstract

The view that employment activation is determined in the product market is central in the Keynesian understanding of macroeconomic causation, marking distance from “mainstreamµ Labour Economics, with partial analyses and notions of “equilibriumµ (un)employment. However, while broadly keeping this viewpoint, stylised facts, evidenced for Italy, showing significant instability of an employment/output elasticity, encourage further reflections on the determinants of employment activation. The quantitative result for additions (reductions) in labour use, given a percentage rise (contraction) of GDP, differs in fact widely amongst countries, or within a country over diverse cyclical episodes, even after accounting for the variability of average working time. Recently, more “employment friendlyµ patterns of growth have shown their reverse implication, stagnating productivity. Differentials in the employment elasticity are thus further rationalised. The structural composition of the economy and its change, accounting for composition effects, are considered. After the “structuralµ factors, the role of the institutional settings for labour exchanges, impacting upon “labour intensity of growthµ, remains to be questioned. The paper concludes with first-stage reflections, addressing the fundamental question as to why employment intensity of growth varies over time and space.