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Unemployment in Latin America and the Caribbean

Author

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  • Laurence Ball

    ()

  • Nicolás Roux

    ()

  • Marc Hofstetter

    ()

Abstract

This study constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. We compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak. We also examine large, persistent increases in unemployment over time, finding that they are caused by contractions in aggregate demand. These demand contractions result from either disinflationary monetary policy or the defense of an exchange-rate peg in the face of capital flight. Our evidence supports hysteresis theories in which short-run changes in unemployment influence the natural rate. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Laurence Ball & Nicolás Roux & Marc Hofstetter, 2013. "Unemployment in Latin America and the Caribbean," Open Economies Review, Springer, vol. 24(3), pages 397-424, July.
    • Handle: RePEc:kap:openec:v:24:y:2013:i:3:p:397-424
    DOI: 10.1007/s11079-012-9248-2
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    References listed on IDEAS

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    1. Laurence Ball & Nicolás Roux & Marc Hofstetter, 2013. "Unemployment in Latin America and the Caribbean," Open Economies Review, Springer, vol. 24(3), pages 397-424, July.
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    6. Laurence Ball, 1999. "Aggregate demand and Long-Run Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 189-252.
    7. Douglas Staiger & James H. Stock & Mark W. Watson, 1997. "The NAIRU, Unemployment and Monetary Policy," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 33-49, Winter.
    8. Ball, Laurence, 2010. "The Performance of Alternative Monetary Regimes," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 23, pages 1303-1343, Elsevier.
    9. Bernal Raquel, 2009. "The Informal Labor Market in Colombia: identification and characterization," Revista Desarrollo y Sociedad, Universidad de los Andes - CEDE, September.
    10. Siebert, Horst, 1997. "Labor market rigidities and unemployment in Europe," Kiel Working Papers 787, Kiel Institute for the World Economy (IfW).
    11. Jeff Fuhrer & Jane Sneddon Little & Yolanda K. Kodrzycki & Giovanni P. Olivei (ed.), 2009. "Understanding Inflation and the Implications for Monetary Policy: A Phillips Curve Retrospective," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262013630, September.
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    More about this item

    Keywords

    Unemployment; Latin America; Hysteresis; Monetary policy; Disinflation; E24; E52; F41; J60;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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