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The dynamics of the labor markets in Chile

Author

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  • Víctor O. Lima
  • Ricardo D. Paredes

    ()

Abstract

Through flows from 3 states, employment, unemployment and out of the labor force, we analyze the dynamics of labor markets in Chile from 1962-2007. We identify some periods of different labor market regimes and relate them with changes in flexibility. We found that reforms such as that of 1967, which introduced the “just cause” requirement to fire workers, did not help workers to keep their jobs, but there is no evidence of significant changes in inflexibility. Other labor regimes significantly affected transitions, but surprisingly, it was the new regime identified in 1990, that increased mobility. We interpret this as the result of the consolidation of a flexibility prone model that, until then, had been associated with an unpopular imposition by the military regime. Finally, we do not find any evidence showing that after 1998 the changes in labor participation and consequently, that the explanations of the changes in the unemployment rate could be associated with “added and discouraged worker eff

Suggested Citation

  • Víctor O. Lima & Ricardo D. Paredes, 2007. "The dynamics of the labor markets in Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 34(2 Year 20), pages 163-183, December.
  • Handle: RePEc:udc:esteco:v:34:y:2007:i:2:p:163-183
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    References listed on IDEAS

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    1. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 91-134.
    2. Raphael Bergoeing & Felipe Morandé, 2002. "Crecimiento, Empleo e Impuestos al Trabajo: Chile 1998-2001," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 39(117), pages 157-174.
    3. Karanassou, Marika & Snower, Dennis J, 1998. "How Labour Market Flexibility Affects Unemployment: Long-Term Implications of the Chain Reaction Theory," Economic Journal, Royal Economic Society, vol. 108(448), pages 832-849, May.
    4. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications 4227, Inter-American Development Bank, Research Department.
    5. Claudio Montenegro & Carmen Pagés, 2005. "Who Benefits from Labor Market Regulations? Chile 1960-1998," Central Banking, Analysis, and Economic Policies Book Series,in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.), Labor Markets and Institutions, edition 1, volume 8, chapter 4, pages 077-114 Central Bank of Chile.
    6. Erik Haindl R., 1985. "Un modelo para la determinación de flujos y parámetros dinámicos en el mercado del trabajo," Estudios de Economia, University of Chile, Department of Economics, vol. 12(1 Year 19), pages 27-48, June.
    7. Alvaro Forteza & Martín Rama, 2000. "Labor Market "Rigidity" and the Success of Economic Reforms Across more than One Hundred Countries," Documentos de Trabajo (working papers) 0600, Department of Economics - dECON.
    8. Di Tella, Rafael & MacCulloch, Robert, 2005. "The consequences of labor market flexibility: Panel evidence based on survey data," European Economic Review, Elsevier, vol. 49(5), pages 1225-1259, July.
    9. Claudio Sapelli, 1996. "Modelos para Pensar el Mercado de Trabajo: Una Revisión de la Literatura Chilena," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 33(99), pages 251-276.
    10. Alexis Camhi & Eduardo Engel & Alejandro Micco, 1997. "Dinámica de empleo y productividad en manufactura: Evidencia micro y consecuencias macro," Documentos de Trabajo 19, Centro de Economía Aplicada, Universidad de Chile.
    11. Carmen Pagés-Serra, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Fall 2000), pages 109-154, August.
    12. Paredes M., Ricardo, 2003. "Participación laboral de la mujer en ausencia de datos de panel. El caso de Chile," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(279), pages 407-422, julio-sep.
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    Cited by:

    1. repec:chb:bcchec:v:21:y:2018:i:1:p:004-033 is not listed on IDEAS
    2. Cilasun, Seyit Mumin & Acar, Elif Oznur & Gunalp, Burak, 2015. "The Effects of Labor Market Reforms on the Labor Market Dynamics in Turkey," MPRA Paper 64767, University Library of Munich, Germany.
    3. Alberto Naudon D. & Andrés Pérez M., 2018. "Unemployment dynamics in Chile: 1960-2015," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 21(1), pages 004-033, April.
    4. Macarena García & Alberto Naudon, 2012. "Dinámica Laboral en Chile," Working Papers Central Bank of Chile 659, Central Bank of Chile.

    More about this item

    Keywords

    Labor markets; transition probabilities; unemployment.;

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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