Cyclical Movements in Unemployment and Informality in Developing Countries

This paper analyzes the cyclical properties of worker flows in Brazil and Mexico, two important developing countries with large unregulated or informal sectors. It generates three stylized facts that are critical to the accurate modeling of the...

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Main Authors:	Bosch, Mariano, Maloney, William
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING ADJUSTMENT PROCESS AGGREGATE PRODUCTIVITY ATTRITION BUSINESS CYCLE BUSINESS CYCLES BUSINESS SCHOOL CALCULATIONS CONTRIBUTION CONTRIBUTIONS CRISES CULTURAL CHANGE CURRENT JOB CYCLICAL UNEMPLOYMENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISGUISED UNEMPLOYMENT DRIVERS EARNINGS ECONOMIC DEVELOPMENT EMPLOYMENT COMPOSITION EMPLOYMENT DYNAMICS EMPLOYMENT PROGRAM EMPLOYMENT SHARE EMPLOYMENT STATUS EMPLOYMENT STATUSES EQUILIBRIUM UNEMPLOYMENT ESTIMATED PARAMETERS FEDERAL RESERVE FINANCIAL CRISIS FIRM DYNAMICS FIRM SIZE FORMAL LABOR MARKET FORMAL SECTOR WORKERS HEALTH INSURANCE IMPORTANT POLICY INCOME INFORMAL ECONOMY INFORMAL EMPLOYMENT INFORMAL LABOR MARKETS INFORMAL SECTOR INTERNATIONAL LABOR ORGANIZATION INTERNATIONAL LABOUR ORGANIZATION JOB CREATION JOB DESTRUCTION JOB LOSS JOB SEARCH JOB SEPARATION JOBS LABOR CODE LABOR ECONOMICS LABOR FORCE LABOR LAWS LABOR LEGISLATION LABOR MARKET ADJUSTMENT LABOR MARKET INSTITUTIONS LABOR MARKET POLICIES LABOR MARKET TRANSITIONS LABOR MARKETS LABOR ORGANIZATION LABOR REGULATIONS LABOR SURVEYS LABOUR LABOUR FORCE LABOUR MARKET LARGE FIRMS LATIN AMERICAN MACRO ECONOMIC FLUCTUATIONS MACROECONOMIC FLUCTUATIONS MIGRATION MINIMUM WAGE MINORITY NEW JOB PENSION POLICY IMPLICATIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY PREVIOUS SECTION PROBABILITIES PROBABILITY PRODUCTIVE EMPLOYMENT PROGRESS PUBLIC ECONOMICS QUESTIONNAIRE RECESSION RECESSIONARY PERIOD RECESSIONARY PERIODS RECESSIONS RESEARCH ASSISTANCE RESERVE BANK RESPECT SAFETY SAFETY NET SALARIED WORKERS SELF EMPLOYED SELF EMPLOYMENT SELF-EMPLOYMENT SERVANTS SEX SOCIAL PROGRAMS SOCIAL SECURITY SOCIAL SECURITY CONTRIBUTIONS STOCKS TOTAL EMPLOYMENT TOTAL UNEMPLOYMENT TRADE LIBERALIZATION UNEMPLOYED UNEMPLOYED WORKERS UNEMPLOYMENT UNEMPLOYMENT DURATION UNEMPLOYMENT LEVELS UNEMPLOYMENT RATE UNEMPLOYMENT RATES UNPAID FAMILY WORKERS URBAN AREAS URBAN EMPLOYMENT URBAN EMPLOYMENT SURVEY WAGE RIGIDITY WAGE SECTOR WAGES WORK FORCE WORKER WORKERS WORKFORCE WORKING AGE WORKING AGE POPULATION
Online Access:	http://documents.worldbank.org/curated/en/2008/06/9563341/cyclical-movements-unemployment-informality-developing-countries http://hdl.handle.net/10986/6672

id	okr-10986-6672
recordtype	oai_dc
spelling	okr-10986-66722021-04-23T14:02:32Z Cyclical Movements in Unemployment and Informality in Developing Countries Bosch, Mariano Maloney, William ACCOUNTING ADJUSTMENT PROCESS AGGREGATE PRODUCTIVITY ATTRITION BUSINESS CYCLE BUSINESS CYCLES BUSINESS SCHOOL CALCULATIONS CONTRIBUTION CONTRIBUTIONS CRISES CULTURAL CHANGE CURRENT JOB CYCLICAL UNEMPLOYMENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISGUISED UNEMPLOYMENT DRIVERS EARNINGS ECONOMIC DEVELOPMENT EMPLOYMENT COMPOSITION EMPLOYMENT DYNAMICS EMPLOYMENT PROGRAM EMPLOYMENT SHARE EMPLOYMENT STATUS EMPLOYMENT STATUSES EQUILIBRIUM UNEMPLOYMENT ESTIMATED PARAMETERS FEDERAL RESERVE FINANCIAL CRISIS FIRM DYNAMICS FIRM SIZE FORMAL LABOR MARKET FORMAL SECTOR WORKERS HEALTH INSURANCE IMPORTANT POLICY INCOME INFORMAL ECONOMY INFORMAL EMPLOYMENT INFORMAL LABOR MARKETS INFORMAL SECTOR INTERNATIONAL LABOR ORGANIZATION INTERNATIONAL LABOUR ORGANIZATION JOB CREATION JOB DESTRUCTION JOB LOSS JOB SEARCH JOB SEPARATION JOBS LABOR CODE LABOR ECONOMICS LABOR FORCE LABOR LAWS LABOR LEGISLATION LABOR MARKET ADJUSTMENT LABOR MARKET INSTITUTIONS LABOR MARKET POLICIES LABOR MARKET TRANSITIONS LABOR MARKETS LABOR ORGANIZATION LABOR REGULATIONS LABOR SURVEYS LABOUR LABOUR FORCE LABOUR MARKET LARGE FIRMS LATIN AMERICAN MACRO ECONOMIC FLUCTUATIONS MACROECONOMIC FLUCTUATIONS MIGRATION MINIMUM WAGE MINORITY NEW JOB PENSION POLICY IMPLICATIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY PREVIOUS SECTION PROBABILITIES PROBABILITY PRODUCTIVE EMPLOYMENT PROGRESS PUBLIC ECONOMICS QUESTIONNAIRE RECESSION RECESSIONARY PERIOD RECESSIONARY PERIODS RECESSIONS RESEARCH ASSISTANCE RESERVE BANK RESPECT SAFETY SAFETY NET SALARIED WORKERS SELF EMPLOYED SELF EMPLOYMENT SELF-EMPLOYMENT SERVANTS SEX SOCIAL PROGRAMS SOCIAL SECURITY SOCIAL SECURITY CONTRIBUTIONS STOCKS TOTAL EMPLOYMENT TOTAL UNEMPLOYMENT TRADE LIBERALIZATION UNEMPLOYED UNEMPLOYED WORKERS UNEMPLOYMENT UNEMPLOYMENT DURATION UNEMPLOYMENT LEVELS UNEMPLOYMENT RATE UNEMPLOYMENT RATES UNPAID FAMILY WORKERS URBAN AREAS URBAN EMPLOYMENT URBAN EMPLOYMENT SURVEY WAGE RIGIDITY WAGE SECTOR WAGES WORK FORCE WORKER WORKERS WORKFORCE WORKING AGE WORKING AGE POPULATION This paper analyzes the cyclical properties of worker flows in Brazil and Mexico, two important developing countries with large unregulated or informal sectors. It generates three stylized facts that are critical to the accurate modeling of the sector and which suggest the need to rethink the approaches to date. First, the unemployment rate is countercyclical essentially because job separations of informal workers increase dramatically in recessions. Second, the share of formal employment is countercyclical because of the difficulty of finding formal jobs from inactivity, unemployment and other informal jobs during recessions rather than because of increased separation from formal jobs. Third, flows from formality into informality are not countercyclical, but, if anything, pro-cyclical. Together, these challenge the conventional wisdom that has guided the modeling the sector that informal workers are primarily those rationed out of the formal labor market. They also offer a new synthesis of the mechanics of the cyclical adjustment process. Finally, the paper offers estimates of the moments of worker flows series that are needed for calibration. 2012-05-30T18:12:03Z 2012-05-30T18:12:03Z 2008-06 http://documents.worldbank.org/curated/en/2008/06/9563341/cyclical-movements-unemployment-informality-developing-countries http://hdl.handle.net/10986/6672 English Policy Research Working Paper No. 4648 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Mexico Brazil
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTING ADJUSTMENT PROCESS AGGREGATE PRODUCTIVITY ATTRITION BUSINESS CYCLE BUSINESS CYCLES BUSINESS SCHOOL CALCULATIONS CONTRIBUTION CONTRIBUTIONS CRISES CULTURAL CHANGE CURRENT JOB CYCLICAL UNEMPLOYMENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISGUISED UNEMPLOYMENT DRIVERS EARNINGS ECONOMIC DEVELOPMENT EMPLOYMENT COMPOSITION EMPLOYMENT DYNAMICS EMPLOYMENT PROGRAM EMPLOYMENT SHARE EMPLOYMENT STATUS EMPLOYMENT STATUSES EQUILIBRIUM UNEMPLOYMENT ESTIMATED PARAMETERS FEDERAL RESERVE FINANCIAL CRISIS FIRM DYNAMICS FIRM SIZE FORMAL LABOR MARKET FORMAL SECTOR WORKERS HEALTH INSURANCE IMPORTANT POLICY INCOME INFORMAL ECONOMY INFORMAL EMPLOYMENT INFORMAL LABOR MARKETS INFORMAL SECTOR INTERNATIONAL LABOR ORGANIZATION INTERNATIONAL LABOUR ORGANIZATION JOB CREATION JOB DESTRUCTION JOB LOSS JOB SEARCH JOB SEPARATION JOBS LABOR CODE LABOR ECONOMICS LABOR FORCE LABOR LAWS LABOR LEGISLATION LABOR MARKET ADJUSTMENT LABOR MARKET INSTITUTIONS LABOR MARKET POLICIES LABOR MARKET TRANSITIONS LABOR MARKETS LABOR ORGANIZATION LABOR REGULATIONS LABOR SURVEYS LABOUR LABOUR FORCE LABOUR MARKET LARGE FIRMS LATIN AMERICAN MACRO ECONOMIC FLUCTUATIONS MACROECONOMIC FLUCTUATIONS MIGRATION MINIMUM WAGE MINORITY NEW JOB PENSION POLICY IMPLICATIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY PREVIOUS SECTION PROBABILITIES PROBABILITY PRODUCTIVE EMPLOYMENT PROGRESS PUBLIC ECONOMICS QUESTIONNAIRE RECESSION RECESSIONARY PERIOD RECESSIONARY PERIODS RECESSIONS RESEARCH ASSISTANCE RESERVE BANK RESPECT SAFETY SAFETY NET SALARIED WORKERS SELF EMPLOYED SELF EMPLOYMENT SELF-EMPLOYMENT SERVANTS SEX SOCIAL PROGRAMS SOCIAL SECURITY SOCIAL SECURITY CONTRIBUTIONS STOCKS TOTAL EMPLOYMENT TOTAL UNEMPLOYMENT TRADE LIBERALIZATION UNEMPLOYED UNEMPLOYED WORKERS UNEMPLOYMENT UNEMPLOYMENT DURATION UNEMPLOYMENT LEVELS UNEMPLOYMENT RATE UNEMPLOYMENT RATES UNPAID FAMILY WORKERS URBAN AREAS URBAN EMPLOYMENT URBAN EMPLOYMENT SURVEY WAGE RIGIDITY WAGE SECTOR WAGES WORK FORCE WORKER WORKERS WORKFORCE WORKING AGE WORKING AGE POPULATION
spellingShingle	ACCOUNTING ADJUSTMENT PROCESS AGGREGATE PRODUCTIVITY ATTRITION BUSINESS CYCLE BUSINESS CYCLES BUSINESS SCHOOL CALCULATIONS CONTRIBUTION CONTRIBUTIONS CRISES CULTURAL CHANGE CURRENT JOB CYCLICAL UNEMPLOYMENT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISGUISED UNEMPLOYMENT DRIVERS EARNINGS ECONOMIC DEVELOPMENT EMPLOYMENT COMPOSITION EMPLOYMENT DYNAMICS EMPLOYMENT PROGRAM EMPLOYMENT SHARE EMPLOYMENT STATUS EMPLOYMENT STATUSES EQUILIBRIUM UNEMPLOYMENT ESTIMATED PARAMETERS FEDERAL RESERVE FINANCIAL CRISIS FIRM DYNAMICS FIRM SIZE FORMAL LABOR MARKET FORMAL SECTOR WORKERS HEALTH INSURANCE IMPORTANT POLICY INCOME INFORMAL ECONOMY INFORMAL EMPLOYMENT INFORMAL LABOR MARKETS INFORMAL SECTOR INTERNATIONAL LABOR ORGANIZATION INTERNATIONAL LABOUR ORGANIZATION JOB CREATION JOB DESTRUCTION JOB LOSS JOB SEARCH JOB SEPARATION JOBS LABOR CODE LABOR ECONOMICS LABOR FORCE LABOR LAWS LABOR LEGISLATION LABOR MARKET ADJUSTMENT LABOR MARKET INSTITUTIONS LABOR MARKET POLICIES LABOR MARKET TRANSITIONS LABOR MARKETS LABOR ORGANIZATION LABOR REGULATIONS LABOR SURVEYS LABOUR LABOUR FORCE LABOUR MARKET LARGE FIRMS LATIN AMERICAN MACRO ECONOMIC FLUCTUATIONS MACROECONOMIC FLUCTUATIONS MIGRATION MINIMUM WAGE MINORITY NEW JOB PENSION POLICY IMPLICATIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY PREVIOUS SECTION PROBABILITIES PROBABILITY PRODUCTIVE EMPLOYMENT PROGRESS PUBLIC ECONOMICS QUESTIONNAIRE RECESSION RECESSIONARY PERIOD RECESSIONARY PERIODS RECESSIONS RESEARCH ASSISTANCE RESERVE BANK RESPECT SAFETY SAFETY NET SALARIED WORKERS SELF EMPLOYED SELF EMPLOYMENT SELF-EMPLOYMENT SERVANTS SEX SOCIAL PROGRAMS SOCIAL SECURITY SOCIAL SECURITY CONTRIBUTIONS STOCKS TOTAL EMPLOYMENT TOTAL UNEMPLOYMENT TRADE LIBERALIZATION UNEMPLOYED UNEMPLOYED WORKERS UNEMPLOYMENT UNEMPLOYMENT DURATION UNEMPLOYMENT LEVELS UNEMPLOYMENT RATE UNEMPLOYMENT RATES UNPAID FAMILY WORKERS URBAN AREAS URBAN EMPLOYMENT URBAN EMPLOYMENT SURVEY WAGE RIGIDITY WAGE SECTOR WAGES WORK FORCE WORKER WORKERS WORKFORCE WORKING AGE WORKING AGE POPULATION Bosch, Mariano Maloney, William Cyclical Movements in Unemployment and Informality in Developing Countries
geographic_facet	Latin America & Caribbean Mexico Brazil
relation	Policy Research Working Paper No. 4648
description	This paper analyzes the cyclical properties of worker flows in Brazil and Mexico, two important developing countries with large unregulated or informal sectors. It generates three stylized facts that are critical to the accurate modeling of the sector and which suggest the need to rethink the approaches to date. First, the unemployment rate is countercyclical essentially because job separations of informal workers increase dramatically in recessions. Second, the share of formal employment is countercyclical because of the difficulty of finding formal jobs from inactivity, unemployment and other informal jobs during recessions rather than because of increased separation from formal jobs. Third, flows from formality into informality are not countercyclical, but, if anything, pro-cyclical. Together, these challenge the conventional wisdom that has guided the modeling the sector that informal workers are primarily those rationed out of the formal labor market. They also offer a new synthesis of the mechanics of the cyclical adjustment process. Finally, the paper offers estimates of the moments of worker flows series that are needed for calibration.
format	Publications & Research :: Policy Research Working Paper
author	Bosch, Mariano Maloney, William
author_facet	Bosch, Mariano Maloney, William
author_sort	Bosch, Mariano
title	Cyclical Movements in Unemployment and Informality in Developing Countries
title_short	Cyclical Movements in Unemployment and Informality in Developing Countries
title_full	Cyclical Movements in Unemployment and Informality in Developing Countries
title_fullStr	Cyclical Movements in Unemployment and Informality in Developing Countries
title_full_unstemmed	Cyclical Movements in Unemployment and Informality in Developing Countries
title_sort	cyclical movements in unemployment and informality in developing countries
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2008/06/9563341/cyclical-movements-unemployment-informality-developing-countries http://hdl.handle.net/10986/6672
_version_	1764400895378849792

Cyclical Movements in Unemployment and Informality in Developing Countries

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