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Two Decades of Structural Shifts in the Brazilian Labor Market: assessing the unemployment rate changes through stylized facts on labor supply and labor demand

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  • Andre de Queiroz Brunelli
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    This paper aims at dissecting how stylized facts of labor supply and labor demand may explain the aggregate unemployment rate developments from 1992 to 2012 using a household level data (PNAD/IBGE) for Brazil as a whole and for its six main metropolitan regions. The conclusions follow. The main stylized fact regarding labor supply is the aging process of the labor force. It lessened the aggregate unemployment rise during the 1990’s by about 20% both in the entire country and in the metropolitan regions and strengthened the unemployment fall by about 30% in Brazil as a whole and by around 20% in the metropolitan regions during the 2000’s. With respect to labor demand, the main stylized facts are that the relative prices have favored the non-tradable sectors, which in addition has shown the most significant rise of the marginal productivity of labor in the last two decades. We argue that it affected sectorial reallocation of employment, which in turn has a negative effect on aggregate unemployment rate conditional on GDP growth. It thus is consistent with the argument which states that employment migrated from tradable sectors towards non-tradable sectors, which are more labor intensive sectors. Besides conventional business cycle changes, which explain the bulk of the actual aggregate unemployment rate developments, the answer to why the aggregate unemployment rate has become so much lower in Brazil is that population has become older and also that the sectorial profile of employment has become increasingly non-tradable

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    Paper provided by Central Bank of Brazil, Research Department in its series Working Papers Series with number 348.

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    Date of creation: Feb 2014
    Handle: RePEc:bcb:wpaper:348
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    1. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2007. "A structural economic dynamics approach to balance-of-payments-constrained growth," Cambridge Journal of Economics, Oxford University Press, vol. 31(5), pages 755-774, September.
    2. 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.
    3. Loungani, Prakash & Rush, Mark & Tave, William, 1990. "Stock market dispersion and unemployment," Journal of Monetary Economics, Elsevier, vol. 25(3), pages 367-388, June.
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