Employment-adjusted Human Development Index

Abstract

Purpose - The current HDI has a limited capacity to reflect the human condition and country rankings in an accurate way. In addition, the main critiques on the HDI suggest that it uses very few or perhaps the wrong indicators in measuring human development levels in countries. This paper aims to investigate whether the inclusion of employment as a criterion in the HDI would yield a different ranking of nations. Design/methodology/approach - In this study, estimates of the proposed Employment-adjusted Human Development Index (E-HDI) are provided for seventy-seven countries for the 2000-2007 period, and comparisons are made both for changes in the human development index (HDI) and rankings over time in each country and for differences between the E-HDI and the UNDP’s HDI across countries. Findings - The experience of a relatively large number of 77 sample countries has offered promising results for the path to improve the current status of the HDI, and hence, to overcome its weakness in terms of ranking of countries. The additional indicator, i.e. employment, improves the explanatory power of the HDI and makes significant contributions to its reliability. Research limitations/implications - The major limitation of the present study has been the lack of data for a number of the human development indicators for the rest of the countries in the world. Practical implications - The employment-adjusted index has great potential to make the HDI more operational. Social implications – By means of E-HDI, the human development performance of the countries can be better evaluated and compared with other countries by using additional information obtained from the employment position of their citizens. Originality/value – This will be the first paper in the literature that incorporates employment into the HDI..