Labor Demand: Chile 1986-2001
Cuadernos de Economía, Vol. 40, N° 121, pp. 478-484, 2003.
Since the recovery of the 1982 crisis, the Chilean labor market evolved very favorably. Employment and real wages of the Chilean population increased steadily since the mid 1980s until 1998. However, since 1998, unemployment rose as the creation of jobs (and therefore net employment) showed a much smaller growth rate compared to the period 1982-1998. The are several alternative explanations for this phenomenon. In the one hand, the irruption of the 1998 Asian crisis must surely had played an important role by affecting overall economic activity. In fact, the GDP growth rate decreased from an average of 7% between 1986 and 1997 to an average of 2.8% between 1998 and 2001. On the other hand, there is also a set of internal factors that might also had impacted the labor market. One of these internal factors is the abrupt increase in the minimum wage from $65,500 in May 1997 to $100,000 in June 2000, while the IPC1 rose only 13% during the same period. A second internal shock in this period is the discussion and promulgation of the reform to the labor market code. This labor reform could have caused greater inflexibility in the labor market and therefore, impacted real wages and employment. This papers looks for empirically determining the factors that might have produced movements in the labor demand of the Chilean economy. The methodology follows Murphy and Welch (1992) by determining the factors that allow a system of labor demand by economic sectors to fulfill the basic restrictions emanated from the economic theory. The study is developed as follows. Section 2 explains the methodology, while section 3 presents the results and section 4 concludes
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Etiquetas: Chile, crisis 1982, crisis económica, mercado laboral