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Economic Integration and Unemployment in Mercosur

Author

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  • Rene Caceres, Luis

    (Unicef)

Abstract

This paper quantifies the interdependence in labor markets that exists in the Mercosur countries. Two sets of panel data are constructed: one formed by the aggregation of annual time series data from Argentina and Brazil, and another with data from Uruguay and Paraguay. These two sets of data are used to estimate a Var model that includes the following variables: economic growth, real effective exchange rates, and unemployment rates. Another Var is estimated including the change in the wage levels in place of the unemployment rates. The results indicate that strong cross border effects ensue between countries such that national unemployment rates drop in response to shocks of economic growth and devaluation in other member countries. The paper ends with a series of recommendations on the design of regional stabilization policies.

Suggested Citation

  • Rene Caceres, Luis, 2011. "Economic Integration and Unemployment in Mercosur," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 26, pages 45-65.
    • Handle: RePEc:ris:integr:0529
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    More about this item

    Keywords

    Economic integration; unemployment; policy coordination;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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