Cyclical Variations in Participation and Employment in Urban Brazil
Brazilian labor markets have performed very strongly for most of the last 15 years, with dramatic increases in the employment rate of unskilled workers and significant declines in the overall unemployment rate. However, the economic and political d...
| Main Authors: | , , |
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/07/26595754/cyclical-variations-participation-employment-urban-brazil http://hdl.handle.net/10986/24952 |
| Summary: | Brazilian labor markets have performed
very strongly for most of the last 15 years, with dramatic
increases in the employment rate of unskilled workers and
significant declines in the overall unemployment rate.
However, the economic and political developments and fiscal
crisis of the last sixteen months in Brazil have resulted in
a substantial decline in the rate of economic activity , a
dramatic slowdown in the rate of new job creation a
devaluation of the domestic currency and increasing concerns
about the sustainability of the gains in poverty reduction
and inequality accomplished during the years of the
commodity boom. The decline in economic activity has raised
concerns again about increasing unemployment rates, and the
extent to which these developments will have an adverse
impact on specific age and gender groups. Efforts to
maintain or increase the proportion of the population
employed in the aggregate or within any specific demographic
group must take into consideration how the unemployment rate
and the labor force participation rate of the group vary
with changes in the level of economic activity. The
sensitivity of the proportion of the population employed to
changes in the level of aggregate demand is a key parameter
informing the design of an appropriate and effective labor
market policy. Specifically, teenagers and young women
between 20-34 years of age comprise only 25 percent of the
adult population, but they account for more than 50 percent
of the cyclical variation in employment. In contrast, adult
men between 26 and 64 years of age, who comprise 32.6 per
cent of the population in the US account for only 23.6
percent of the change in the cyclical variation in
employment. Estimates of the sensitivity of the proportion
of the population employed to changes in the level of
aggregate demand based on data from recent years that
reflect the prevailing structural relationships between
labor demand and employment and labor supply, labor force
participation and unemployment are more useful for
predicting how labor force participation is likely to react
to the downturn in economic activity since the end of the
commodity boom and the onset of the economic crisis in
Brazil. The purpose of this paper is to examine two
inter-related questions about the behavior of the labor
market in Brazil. The first question is about the direction
and sensitivity of the labor force participation rate, and
the employment rate to changes in the level of aggregate
demand. The second question relates to the differences in
the cyclical sensitivity of these key variables across age
and gender groups.The next section of the paper discusses
the recent macroeconomic context, and some of the
limitations associated with using Pesquisa Nacional por
Amostra de Domicílios (PNAD) data to predict changes in the
on the labor force participation rate of different age
gender and skill groups during the crisis. Section 3
discusses the data and the model used |
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