Panama: Selected Issues
IMF Staff Country Reports, June 27, 2024
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- Panama: Selected Issues
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Bibliographic details
- Published: June 27, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400280238.002
Summary of key findings
- This Selected Issues paper discusses unravelling Panama’s large unemployment fluctuations.
- Panama’s labor force and employment have increased remarkably over the last decades.
- The rapid labor force growth was driven by a combination of demographic and social transformations.
- The increase in the labor force participation rate was the result of rising female labor force participation.
- Panama’s income convergence in the 25 years preceding the Pandemic was in large part the result of an increase in the employment to population rate.
- Convergence can either result from an increase in the employment rate relative to that in the US, or from faster labor productivity growth.
- In the case of Panama, about three quarters of the reduction in the income differential with the US was driven by an increase in the employment to population rate, and only one quarter was the result of faster labor productivity growth.
- Going forward, the increase in the employment to population ratio is likely to be slower and, for income convergence to continue, productivity growth will need to accelerate.
- The demographic transition has largely run its course as population growth is projected to keep declining and the share of the working-age population is expected to decrease in the next decades.
Policy implications and projections
- With the employment to population ratio likely to rise more slowly, policy emphasis should shift toward accelerating labor productivity growth to sustain income convergence.
- Demographic projections—population growth projected to keep declining and the share of the working-age population expected to decrease in the next decades—imply reduced automatic labor supply growth, increasing the importance of productivity-enhancing reforms and policies.
- Continued efforts to support female labor force participation remain relevant given their historical contribution to labor force growth.
Thematic coverage and subjects
- Subjects covered: Climate change, Deposit insurance, Environment, Financial crises, Financial safety nets, Labor, Labor force, Natural disasters
- Keywords: B. Dollarized economy, Caribbean, Central America, Climate change, D. labor force, Deposit insurance, E. building RESILIENCE, Europe, Financial safety nets, Global, Labor force, labor market market trend, Natural disasters, South America, unemployment fluctuation
Content in this bundle
- Panama: Selected Issues; IMF Country Report No. 24/189; May 17, 2024