More Work to Do? Taking Stock of Latin American Labor Markets

42 Pages Posted: 8 Apr 2019

See all articles by Antonio C. David

Antonio C. David

World Bank - Policy Research Department; International Monetary Fund (IMF)

Frederic J. Lambert

International Monetary Fund (IMF)

Frederik Toscani

International Monetary Fund

Date Written: March 2019

Abstract

We analyze the performance of labor markets in Latin America since the late 1990s. Strong GDP growth during the commodity boom period led to important gains in employment and a fall in the unemployment rate as labor demand outpaced an increasing labor supply. We emphasize the role of informality in the dynamics of labor markets in Latin America. A re-examination of Okun's law shows that informality dampens changes in unemployment accompanying output fluctuations. Moreover, we present some evidence that countries with higher redundancy costs and cumbersome dismissal regulations, exhibit 'excess' informality over and above what would be expected based on their income and educational levels. Labor market reforms could thus contribute to reducing informality and increasing the responsiveness of labor markets to output growth. However, looking at selected case studies of reforms using the synthetic control method, we find mixed results in terms of labor market outcomes.

Keywords: Labor market institutions, Labor market reforms, Labor market regulations, Labor market policy, Labor market characteristics, Labor Markets, Latin America, Okun’;s Law, Informality, Okun, labor market reform, labor market, employment growth

JEL Classification: E24, J2, J40, E2, D4, O4, J3, E01

Suggested Citation

David, Antonio C. and Lambert, Frederic J. and Toscani, Frederik, More Work to Do? Taking Stock of Latin American Labor Markets (March 2019). IMF Working Paper No. 19/55, Available at SSRN: https://ssrn.com/abstract=3367442

Antonio C. David (Contact Author)

World Bank - Policy Research Department ( email )

1818 H Street
Washington, DC 20433
United States

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

Frederic J. Lambert

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Frederik Toscani

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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