Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America
IMF Working Papers, July 17, 2019
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- Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America
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Bibliographic details
- Authors: Adriana D. Kugler
- Published: July 17, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484393840.001
Overview and research scope
- Documents recent labor market performance in the Latin American region.
- Analyzes unemployment, informality, inequality, and productivity trends over the past two decades.
- Examines potential impacts of labor market institutions: employment protection legislation (EPL), minimum wages (MW), payroll taxes, unemployment insurance (UI), and collective bargaining.
- Assesses impacts of demographic changes (shares of more educated and older workers) on labor market performance.
- Relies on evidence from carefully conducted studies based on micro-data for countries in the region and for other countries with similar income levels.
Key findings on trends
- Unemployment, informality, and inequality have been falling over the past two decades, though still remain high.
- Productivity has remained stubbornly low.
- The decreases in unemployment and informality can be partly explained by:
- Reduced strictness of EPL.
- Reduced payroll taxes.
- Increased shares of more educated and older workers.
- The fall in inequality starting in 2002 can be explained by:
- A combination of binding MW throughout most of the region.
- To a lesser extent, the introduction of UI systems in some countries.
- The role of unions in countries with moderate unionization rates.
- Falling returns to skill associated with increased share of more educated and older workers.
Policy-relevant implications (as presented)
- Labor market institutions affect unemployment, informality, inequality, and productivity in different ways:
- EPL and payroll taxes: reductions associated with declines in unemployment and informality.
- Minimum wages: binding MW associated with the fall in inequality since 2002.
- Unemployment insurance: introduction in some countries contributed to declining inequality.
- Collective bargaining/unions: played a role in countries with moderate unionization rates in reducing inequality.
- Demographic shifts (more educated and older workers) contributed to:
- Lower unemployment and informality.
- Lower returns to skill, contributing to falling inequality.
- The paper emphasizes evidence-based conclusions drawn from micro-data studies rather than prescriptive single-policy mandates.
Publication and metadata
- Author: Adriana D. Kugler
- Date: July 17, 2019
- Series: Working Paper No. 2019/155
- Issue: 155
- Volume: 2019
- Pages: 36
- DOI: https://doi.org/10.5089/9781484393840.001
- Stock No: WPIEA2019155
- ISBN: 9781484393840
- ISSN: 1018-5941
Source: IMF Working Paper "Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America" by Adriana D. Kugler, July 17, 2019.
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