An Analysis of the Nature of Unemployment in Sri Lanka

33 Pages Posted: 28 Dec 2006

See all articles by Kevin Lang

Kevin Lang

Boston University - Department of Economics; National Bureau of Economic Research (NBER)

William T. Dickens

Northeastern University - Department of Economics; Federal Reserve Banks - Federal Reserve Bank of Boston; Brookings Institution

Date Written: July 1991

Abstract

Sri Lanka has a significant chronic unemployment problem. Depending on time period and the definition of unemployment it varies from the low teens to over twenty percent. Nearly all of this unemployment is concentrated among young people who are looking for their first job. Unemployment duration is very long with typical spells lasting four years or more. Although past authors have blamed unemployment on over education, a closer examination shows that once sex, sector and age are controlled for the relation between education and unemployment disappears for urban youth and is significantly weakened for rural youth. We believe that unemployment is generated in part by queuing for high-wage government jobs. We suggest that one reason the unemployed do not take other employment while queuing may be a perceived or real government preference for hiring the unemployed. If our interpretation is correct, replacing government's hiring preference for the unemployed with a normal preference for workers who have demonstrated ability in previous work experience would reduce unemployment. A substantial fraction of the currently unemployed youth would begin actively seeking employment which would supply them with the requisite job experience to obtain government employment.

Suggested Citation

Lang, Kevin and Dickens, William T., An Analysis of the Nature of Unemployment in Sri Lanka (July 1991). NBER Working Paper No. w3777, Available at SSRN: https://ssrn.com/abstract=473941

Kevin Lang (Contact Author)

Boston University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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William T. Dickens

Northeastern University - Department of Economics ( email )

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Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

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Brookings Institution ( email )

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