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Public Sector and Governance

How much does it cost to create a job?

David Robalino's picture
Also available in: Español | Français 
A $10 million investment can actually create just a couple hundred direct jobs. / Photo: Nugroho Nurdikiawan Sunjoyo / World Bank (Yogyakarta, Indonesia)

Creating more and better jobs is central to our work at the World Bank and a shared goal for virtually all countries —developed and developing alike. But oftentimes the policy debate turns to the cost and effectiveness of programs and projects in creating jobs.
 
As an example, I recently found myself in the middle of a discussion regarding a development project aimed at creating employment:  one of the reviewers objected given that the cost per job created was too high. “More than $20,000 per job,” he said, comparing it to much lower numbers (between $500 and $3,000 per job) usually associated with active labor market programs such as training, job search assistance, wage subsidies, or public works.
 
But what is the rationale behind these numbers?

Four policy approaches to support job creation through Global Value Chains

Ruchira Kumar's picture
 Maria Fleischmann / World Bank

Mexico created over 60,000 jobs between 1993 to 2000 upgrading the apparel value chain from assembly to direct distribution to customers.  (Photo: Maria Fleischmann / World Bank)

As we discussed in our previous post, Global Value Chains can lead to the creation of more, inclusive and better jobs. GVCs can be a win-win for firms that create better jobs while they enjoy greater efficiency, productivity, and profits. However, there is a potential trade-off between increasing competitiveness and job creation, and the exact nature of positive labor market outcomes depends on several parameters. Given the cross-border (and, therefore, multiple jurisdictive) nature of GVCs, national policy choices to strengthen positive labor outcomes are limited. However, national governments can make policy decisions to facilitate GVC participation that is commensurate with positive labor market outcomes.