Mauritius: Unemployment and the Role of Institutions

18 Pages Posted: 14 Feb 2006

See all articles by Calvin L. McDonald

Calvin L. McDonald

International Monetary Fund (IMF)

James Y. Yao

International Monetary Fund (IMF)

Date Written: November 2003

Abstract

Despite strong economic growth, a U-curve unemployment phenomenon in Mauritius can be observed. Unemployment plunged from 21 percent to less than 4 percent between the early 1980s and the early 1990s, but this trend was reversed and the rate increased to 10 percent by end-2002. This paper provides an analytical framework to explain this development. The growth of higher-skilled sectors coupled with rigidities in the labor market seem to account for the observed unemployment behavior. Policy makers can improve employment prospects by not only investing in education to reduce skills mismatch but also by reforming the pay-setting institutions.

Keywords: Unemployment, institutions, wage

JEL Classification: J20, J64, E23, O33

Suggested Citation

McDonald, Calvin L. and Yao, James Y., Mauritius: Unemployment and the Role of Institutions (November 2003). IMF Working Paper No. 03/211, Available at SSRN: https://ssrn.com/abstract=880881

Calvin L. McDonald (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

James Y. Yao

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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