Unemployment in Latin America and the Caribbean

38 Pages Posted: 8 Nov 2011

See all articles by Laurence Ball

Laurence Ball

Johns Hopkins University - Department of Economics; National Bureau of Economic Research (NBER); International Monetary Fund (IMF)

Marc Hofstetter

Universidad de los Andes

Nicolás de Roux

Universidad de los Andes - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 2011

Abstract

This study constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. We compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak. We also examine large, persistent increases in unemployment over time, finding that they are caused by contractions in aggregate demand. These demand contractions result from either disinflationary monetary policy or the defense of an exchange-rate peg in the face of capital flight. Our evidence supports hysteresis theories in which short-run changes in unemployment influence the natural rate.

Keywords: Caribbean, Cross country analysis, Disinflation, Latin America, Monetary policy, Unemployment

Suggested Citation

Ball, Laurence M. and Hofstetter, Marc and de Roux, Nicolás, Unemployment in Latin America and the Caribbean (October 2011). IMF Working Paper No. 11/252, Available at SSRN: https://ssrn.com/abstract=1956399

Laurence M. Ball (Contact Author)

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Marc Hofstetter

Universidad de los Andes ( email )

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Nicolás De Roux

Universidad de los Andes - Department of Economics ( email )

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Colombia

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