Just how good is unemployment as a measure of welfare? A note
Governments are rightly concerned with employment generation to make growth inclusive. The use of the open unemployment rate to measure success, however, may be misplaced. In a developing country like the Philippines, with a large informal sector and in the absence of unemployment insurance, open unemployment is primarily a middle-class phenomenon: the unemployed are not predominantly poor, and the poor are not predominantly unemployed. Measures of productivity and shifts of labor across sectors may contain more information and be more welfare-relevant.
JEL classification: J21, I32, O15
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