IMF Staff Country Reports

Panama: Selected Issues

June 27, 2024

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Format: Chicago

International Monetary Fund. Western Hemisphere Dept. "Panama: Selected Issues", IMF Staff Country Reports 2024, 189 (2024), accessed December 3, 2024, https://doi.org/10.5089/9798400280238.002

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Summary

This Selected Issues paper discusses unravelling Panama’s large unemployment fluctuations. Panama’s labor force and employment have increased remarkably over the last decades. The rapid labor force growth was driven by a combination of demographic and social transformations. The increase in the labor force participation rate was the result of rising female labor force participation. Panama’s income convergence in the 25 years preceding the Pandemic was in large part the result of an increase in the employment to population rate. Convergence can either result from an increase in the employment rate relative to that in the US, or from faster labor productivity growth. In the case of Panama, about three quarters of the reduction in the income differential with the US was driven by an increase in the employment to population rate, and only one quarter was the result of faster labor productivity growth. Going forward, the increase in the employment to population ratio is likely to be slower and, for income convergence to continue, productivity growth will need to accelerate. The demographic transition has largely run its course as population growth is projected to keep declining and the share of the working-age population is expected to decrease in the next decades.

Subject: Climate change, Deposit insurance, Environment, Financial crises, Financial safety nets, Labor, Labor force, Natural disasters

Keywords: B. Dollarized economy, Caribbean, Central America, Climate change, D. labor force, Deposit insurance, E. building RESILIENCE, Europe, Financial safety nets, Global, Labor force, Labor market market trend, Natural disasters, South America, Unemployment fluctuation

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