Open Economies Review

, Volume 24, Issue 3, pp 397–424 | Cite as

Unemployment in Latin America and the Caribbean

  • Laurence Ball
  • Nicolás De Roux
  • Marc Hofstetter
Research Article

Abstract

This study constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. We compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak. We also examine large, persistent increases in unemployment over time, finding that they are caused by contractions in aggregate demand. These demand contractions result from either disinflationary monetary policy or the defense of an exchange-rate peg in the face of capital flight. Our evidence supports hysteresis theories in which short-run changes in unemployment influence the natural rate.

Keywords

Unemployment Latin America Hysteresis Monetary policy Disinflation 

JEL

E24 E52 F41 J60 

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Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  • Laurence Ball
    • 1
  • Nicolás De Roux
    • 2
  • Marc Hofstetter
    • 3
  1. 1.Department of EconomicsJohns Hopkins UniversityBaltimoreUSA
  2. 2.Columbia UniversityNew YorkUSA
  3. 3.Department of Economics and CEDEUniversidad de los AndesBogotaColombia

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