THE ECONOMİC MECHANİSMS BETWEEN EMPLOYMENT AND POPULATİON İNCOME

Abstract

This study investigates the necessity between employment and population income in Azerbaijan. The research establishes that while Azerbaijan has achieved macroeconomic stability and poverty reduction in past decades, structural labor-market challenges—informality, vulnerable employment, skills mismatches, and gender disparities—continue to weaken the direct transmission of economic growth into higher household incomes. The scientific results demonstrate that employment quality, rather than quantity alone, is decisive for sustained income growth, and that mechanisms combining firm productivity with human capital development yield the strongest income effects. The scientific novelty of the work lies in its integrative approach: the study does not view employment and income as isolated outcomes but as mutually reinforcing components of a national development system. By applying recent data and international diagnostics, it formulates a systemic framework linking sectoral diversification, SME productivity, skills upgrading, formalization incentives, and gender responsive policies into a coherent model. This framework provides a novel conceptualization of how organizational and economic mechanisms can be aligned in Azerbaijan to transform job creation into urable income growth. The practical significance of the essay is its policy-oriented recommendations. It proposes targeted instruments—such as demand-driven active labor market programs, regional cluster development, minimum wage calibration, and social insurance reforms—that can be directly applied by policymakers, ministries, and development partners. These measures not only enhance the inclusiveness of growth but also reduce regional and gender income disparities, expand formal employment, and strengthen the fiscal base. Thus, the study offers both analytical insights and actionable pathways for ensuring that Azerbaijan’s ongoing diversification translates into higher and more equitable living standards for its population.