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Peru Labor Market Study. Background Paper on Labor Productivity. Final Report


  • Jose S. Rodriguez

    (Departamento de Economia - Pontificias Universidad Catolica del Peru)

  • Mario Tello

    (Departamento de Economia - Pontificias Universidad Catolica del Peru)


The evidence at the micro level shows, that in the booming period, the rate of growth of labor productivity of the manufacturing sector is mainly explained by the labor productivity rate of growth of formal medium and large size firms rather than for nonfarm informal microenterprises of the urban sector. On the other hand, the reallocation of employment within the manufacturing formal sector also has played an important role in the labor productivity rate of growth of this sector, in particular from firms which decreased their level of employment. With regard to the informal micro-enterprises (IME) in urban areas accounting for a significant proportion of the workforce, in the booming period 2002-2007 employment of the whole IMEs sector have grown at annual rates higher than the overall economy but the value added grown at a lower rate. As a consequence, the average product of labor (i.e. value added per worker) declined during this period. Consequently, productivity growth in the economy in this period, in contrast with the behavior of the IMEs, is a result of productivity growth in the formal sector (modern establishments with relatively larger size). As it is shown in the paper, this has been the case for the manufacturing sector. JEL Classification-JEL: J21, J23, J24, J42, J46

Suggested Citation

  • Jose S. Rodriguez & Mario Tello, 2009. "Peru Labor Market Study. Background Paper on Labor Productivity. Final Report," Informes / Reports inf200901, Departamento de Economía - Pontificia Universidad Católica del Perú.
  • Handle: RePEc:pcp:pucinf:inf200901

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    References listed on IDEAS

    1. Ricardo J. Caballero & Mohamad L. Hammour, 1996. "On the Timing and Efficiency of Creative Destruction," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 805-852.
    2. repec:idb:idbbks:279 is not listed on IDEAS
    3. Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006. "The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 3-26, Summer.
    4. Eduardo Fernández-Arias & Juan S. Blyde & Indermit S. Gill & Alexander Monge Naranjo & Pablo A. Neumeyer & Carlos G. Fernández Valdovinos & Armando Castelar Pinheiro & J. Rodrigo Fuentes & Hugo A. Hop, 2005. "Sources of Growth in Latin America: What Is Missing?," IDB Publications (Books), Inter-American Development Bank, number 33798 edited by Eduardo Fernández-Arias & Juan S. Blyde & Rodolfo E. Manuelli, February.
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    More about this item


    labor productivity; informality; microenterprices; Peru;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market


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