Can the informal sector affect the relationship between unemployment and output? An analysis of the Mexican case

Cortez, Willy Walter
Islas C., Alejandro

2019-04-08T21:47:03Z

LC/PUB.2018/26-P
8

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A key aspect of developing countries is the existence of a large informal sector. In the present paper, we analyse the effect of this feature on the relationship between unemployment changes and output growth for Mexico, a country characterized by the existence of a large informal sector. Following recent studies on Okun’s coefficient, we first test whether the relationship between the cyclical components of unemployment and output is asymmetric. We then explore the possibility that this non-linear relationship may be affected by changes in the informal sector. Our results indicate that there is evidence of an asymmetric relationship between the cyclical components.

CASE STUDIES; MATHEMATICAL MODELS; ECONOMIC GROWTH; UNEMPLOYMENT; LABOUR MOBILITY; ESTUDIOS DE CASOS; INFORMAL SECTOR; MOVILIDAD DE LA MANO DE OBRA; MODELOS MATEMATICOS; CRECIMIENTO ECONOMICO; DESEMPLEO; SECTOR INFORMAL;