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

By Antonio David, Frederic Lambert, Frederik G Toscani

March 8, 2019

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Format: Chicago

Antonio David, Frederic Lambert, and Frederik G Toscani. More Work to Do? Taking Stock of Latin American Labor Markets, (USA: International Monetary Fund, 2019) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Employment, Labor, Labor market institutions, Labor markets, Unemployment

Keywords: Central America, Collective bargaining, Employment, Employment growth, Employment protection regime, Financial crisis, Global, Growth rate, Indicators in Latin America, Informality, Institutions data, Labor market institutions, Labor market slack, Labor Markets, Labor markets in Latin America, Latin America, Low income, Minimum wage, Okun’s Law, Participation rate, South America, Terms of trade, Unemployment, Unemployment margin, Unemployment rate, Wage council, Wage pressure, WP

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/055
Stock No:

WPIEA2019055
ISBN:

9781498302784
ISSN:

1018-5941

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