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The NAIRU and informality in the Mexican labor market/La NAIRU y la informalidad en el mercado laboral mexicano

Author

Listed:
  • Ana María Aguilar Argaez

    (Bank for International Settlements and Banco de México)

  • Carlo Alcaraz

    (Banco de México)

  • Claudia Ramírez

    (Banco de México)

  • Cid Alonso Rodríguez Pérez

    (Banco de México)

Abstract

The non-accelerating inflation rate of unemployment (NAIRU) is not directly observable and the presence of informal workers imposes an additional challenge in its estimation. In this paper, we present an estimation of the traditional NAIRU for Mexico and an alternative measure that includes informality as an indicator of labor underutilization. We find that both measures of NAIRU and the associated labor market slack indicators follow similar patterns over time. However, the slack estimated with the indicator that includes informality seems to predict inflationary pressures more accurately when the unemployment gap is close to zero.

Suggested Citation

  • Ana María Aguilar Argaez & Carlo Alcaraz & Claudia Ramírez & Cid Alonso Rodríguez Pérez, 2021. "The NAIRU and informality in the Mexican labor market/La NAIRU y la informalidad en el mercado laboral mexicano," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 36(1), pages 177-230.
    • Handle: RePEc:emx:esteco:v:36:y:2021:i:1:p:177-230
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    File URL: https://estudioseconomicos.colmex.mx/index.php/economicos/article/view/417/535
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    More about this item

    Keywords

    desempleo; informalidad; NAIRU; ciclo económico; unemployment; informality; business cycle;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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