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Macroprudential Policy and Labor Market Dynamics in Latin America

2015
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Release : 2015
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Book Synopsis Macroprudential Policy and Labor Market Dynamics in Latin America by : Alan Finkelstein Shapiro

Download or read book Macroprudential Policy and Labor Market Dynamics in Latin America written by Alan Finkelstein Shapiro. This book was released on 2015. Available in PDF, EPUB and Kindle. Book excerpt: This paper builds a small open economy business cycle model with labor and financial market frictions that incorporates frictional, endogenous self-employment entry and a link between formal credit markets, informal credit, and the labor market. The paper then shows that the model is consistent with the cyclical behavior of both labor and credit markets in Latin American economies and analyzes the aggregate consequences of cyclical macroprudential policy for labor market and aggregate dynamics. It is found that a policy that reduces credit fluctuations successfully reduces consumption, investment, and output volatility, but generates substantially higher unemployment fluctuations in response to productivity shocks. Moreover, the policy increases the volatility of all these variables in response to net worth shocks. The link between formal credit markets, input credit between firms, and self-employment plays a key role in explaining the adverse impact of macroprudential policy on unemployment dynamics. The findings point to potential gains from policy complementarities between macroprudential regulation and active labor market interventions over the business cycle.

Labor Market Dynamics, Informality and Regulations in Latin America

2020-01-31 Business & Economics
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Release : 2020-01-31
Genre : Business & Economics
Kind : eBook
Book Rating : 759/5 ( reviews)

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Book Synopsis Labor Market Dynamics, Informality and Regulations in Latin America by : Mr.Antonio David

Download or read book Labor Market Dynamics, Informality and Regulations in Latin America written by Mr.Antonio David. This book was released on 2020-01-31. Available in PDF, EPUB and Kindle. Book excerpt: Labor markets in Latin America and the Caribbean (LAC) are characterized by high levels of informality and relatively rigid regulation. This paper shows that these two features are related and together make the speed of adjustment of employment to shocks slower, especially when regulations are tightly enforced. Evidence suggests that strict labor market regulations also have an adverse effect on medium-term growth. While both regulations on prices (minimum wages) and quantities (employment protection) decrease the speed of adjustment to shocks, they appear to be binding in different phases of the cycle—the former affects mostly the (net) job creation margin and the latter the (net) job destruction margin. The results also highlight possible interactions between labor market regulations and the effectiveness of macro-stabilization tools—including exchange rate depreciation.

Macroprudential Policy and Labor Market Dynamics in Emerging Economies

2015-04-03 Business & Economics
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Release : 2015-04-03
Genre : Business & Economics
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Book Rating : 662/5 ( reviews)

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Book Synopsis Macroprudential Policy and Labor Market Dynamics in Emerging Economies by : Alan Finkelstein Shapiro

Download or read book Macroprudential Policy and Labor Market Dynamics in Emerging Economies written by Alan Finkelstein Shapiro. This book was released on 2015-04-03. Available in PDF, EPUB and Kindle. Book excerpt: Emerging economies have high shares of self-employed individuals running owner-only firms who, in contrast to many salaried firms, have little access to formal financing and therefore rely on informal financing (input credit) from other firms. We build a small open economy real business cycle model with labor and financial market frictions where formal credit markets, informal credit, and the structure of the labor market interact. The model successfully replicates the cyclical behavior of sectoral employment, formal credit, and the main macroeconomic aggregates in emerging economies. We show that a countercyclical macroprudential policy that reduces formal credit fluctuations has positive though quantitatively limited effects on consumption and output volatility, but generates larger unemployment fluctuations in response to productivity shocks; the same policy increases labor market and aggregate volatility in response to net worth shocks. The link between input credit and the labor market structure---key for capturing the cyclical dynamics of labor and credit markets in the data---plays a crucial role for these results.

More Work to Do? Taking Stock of Latin American Labor Markets

2019-03-08 Business & Economics
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Release : 2019-03-08
Genre : Business & Economics
Kind : eBook
Book Rating : 785/5 ( reviews)

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Book Synopsis More Work to Do? Taking Stock of Latin American Labor Markets by : Mr.Antonio David

Download or read book More Work to Do? Taking Stock of Latin American Labor Markets written by Mr.Antonio David. This book was released on 2019-03-08. Available in PDF, EPUB and Kindle. Book excerpt: We analyze the performance of labor markets in Latin America since the late 1990s. Strong GDP growth during the commodity boom period led to important gains in employment and a fall in the unemployment rate as labor demand outpaced an increasing labor supply. We emphasize the role of informality in the dynamics of labor markets in Latin America. A re-examination of Okun’s law shows that informality dampens changes in unemployment accompanying output fluctuations. Moreover, we present some evidence that countries with higher redundancy costs and cumbersome dismissal regulations, exhibit “excess” informality over and above what would be expected based on their income and educational levels. Labor market reforms could thus contribute to reducing informality and increasing the responsiveness of labor markets to output growth. However, looking at selected case studies of reforms using the synthetic control method, we find mixed results in terms of labor market outcomes.

Macroprudential Policy and Labor Market Dynamics in Emerging Economies

2015-04-03 Business & Economics
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Release : 2015-04-03
Genre : Business & Economics
Kind : eBook
Book Rating : 647/5 ( reviews)

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Book Synopsis Macroprudential Policy and Labor Market Dynamics in Emerging Economies by : Alan Finkelstein Shapiro

Download or read book Macroprudential Policy and Labor Market Dynamics in Emerging Economies written by Alan Finkelstein Shapiro. This book was released on 2015-04-03. Available in PDF, EPUB and Kindle. Book excerpt: Emerging economies have high shares of self-employed individuals running owner-only firms who, in contrast to many salaried firms, have little access to formal financing and therefore rely on informal financing (input credit) from other firms. We build a small open economy real business cycle model with labor and financial market frictions where formal credit markets, informal credit, and the structure of the labor market interact. The model successfully replicates the cyclical behavior of sectoral employment, formal credit, and the main macroeconomic aggregates in emerging economies. We show that a countercyclical macroprudential policy that reduces formal credit fluctuations has positive though quantitatively limited effects on consumption and output volatility, but generates larger unemployment fluctuations in response to productivity shocks; the same policy increases labor market and aggregate volatility in response to net worth shocks. The link between input credit and the labor market structure---key for capturing the cyclical dynamics of labor and credit markets in the data---plays a crucial role for these results.

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