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An Analysis of the Nature of Unemployment in Sri Lanka

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  • William T. Dickens
  • Kevin Lang

Abstract

Sri Lanka has a significant chronic unemployment problem. Depending on time period and the definition of unemployment it varies from the low teens to over twenty percent. Nearly all of this unemployment is concentrated among young people who are looking for their first job. Unemployment duration is very long with typical spells lasting four years or more. Although past authors have blamed unemployment on over education, a closer examination shows that once sex, sector and age are controlled for the relation between education and unemployment disappears for urban youth and is significantly weakened for rural youth. We believe that unemployment is generated in part by queuing for high-wage government jobs. We suggest that one reason the unemployed do not take other employment while queuing may be a perceived or real government preference for hiring the unemployed. If our interpretation is correct, replacing government's hiring preference for the unemployed with a normal preference for workers who have demonstrated ability in previous work experience would reduce unemployment. A substantial fraction of the currently unemployed youth would begin actively seeking employment which would supply them with the requisite job experience to obtain government employment.

Suggested Citation

  • William T. Dickens & Kevin Lang, 1991. "An Analysis of the Nature of Unemployment in Sri Lanka," NBER Working Papers 3777, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3777 Note: LS
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    1. Fisher, S. & Gelb, A., 1990. "Issues In Socialist Economy Reform," Working papers 567, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Jacob A. Frenkel & Rudiger Dornbusch & William H. Branson & Ricardo H. Arriazu, 1983. "Panel Discussion on Southern Cone," IMF Staff Papers, Palgrave Macmillan, vol. 30(1), pages 164-184, March.
    3. Fischer, Stanley & Gelb, Alan, 1990. "Issues in socialist economy reform," Policy Research Working Paper Series 565, The World Bank.
    4. Lawrence J. Brainard, 1991. "Reform in Eastern Europe: creating a capital market," Economic Review, Federal Reserve Bank of Kansas City, issue Jan, pages 49-58.
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    Cited by:

    1. Aysit Tansel & H. Mehmet Taşçı, 2010. "Hazard Analysis of Unemployment Duration by Gender in a Developing Country: The Case of Turkey," LABOUR, CEIS, vol. 24(4), pages 501-530, December.
    2. MartÌn Rama, 2003. "The Sri Lankan Unemployment Problem Revisited," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 510-525, August.
    3. Pieter Serneels, 2002. "Explaining Non-Negative Duration Dependence Among the Unemployed," CSAE Working Paper Series 2002-13, Centre for the Study of African Economies, University of Oxford.
    4. Pieter Serneels, 2002. "The added worked effect and intra household aspects of unemployment," CSAE Working Paper Series 2002-14, Centre for the Study of African Economies, University of Oxford.
    5. Martin Rama, 2002. "Globalization and Workers in Developing Countries," Economics Study Area Working Papers 41, East-West Center, Economics Study Area.
    6. Pieter Serneels, 2004. "The Nature of Unemployment in Urban Ethiopia," Development and Comp Systems 0409042, EconWPA.

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