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Macroeconomic Shocks, Inflation, and Latin America’s Labor Market

In: Monetary Policy and Macroeconomic Stabilization in Latin America


  • Ana Maria Loboguerrero

    (Inter-American Development Bank)

  • Ugo Panizza

    (Inter-American Development Bank)


This paper looks at how macroeconomic volatility is transmitted to the labor market. It estimates employment, unemployment, and wage Okun coefficients and uses them to show that, compared with industrial countries, Latin American countries adjust to shocks more through wages than through employment. It shows that inflation plays some role in explaining the difference between em-ployment elasticity in Latin America and industrial countries but that there is a difference between the two regions that cannot be explained away by differences in inflation. When focusing on Latin America, the paper finds that within Latin America, inflation increases labor market flexibility in countries that have highly regulated labor markets and that enforce regulations.

Suggested Citation

  • Ana Maria Loboguerrero & Ugo Panizza, 2005. "Macroeconomic Shocks, Inflation, and Latin America’s Labor Market," Springer Books, in: Rolf J. Langhammer & Lúcio Vinhas Souza (ed.), Monetary Policy and Macroeconomic Stabilization in Latin America, pages 177-197, Springer.
  • Handle: RePEc:spr:sprchp:978-3-540-28201-3_11
    DOI: 10.1007/3-540-28201-7_11

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