Labor Market Dynamic in Chile:The Role of the Terms of Trade

Juan Pablo Medina and Alberto Naudon ()

Journal Economía Chilena (The Chilean Economy), 2012, vol. 15, issue 1, pages 32-75

Abstract: This paper explores some of the channels through which the terms of trade influence the labor market in an emerging economy like Chile. To do so, we analyze the cyclical properties of labor variables using an autoregressive vector to estimate the responses of the labor market to a terms of trade shock in Chile, for which two sources are defined: the mining industry and other sectors. We also develop a multiple sector model with search frictions that generates fluctuations in the rate of unemployment. Using a version of the model calibrated for Chile, we analyze its capacity to replicate the observed responses of the labor market to terms of trade fluctuations. We find that the model can qualitatively predict the effects of innovations in the terms of trade on the labor variables. However, from a quantitative standpoint, the base model is unable to replicate all the estimated responses of the labor market variables to the terms of trade. Alternative versions of the model are used to examine what elements are required to have quantitative predictions that are similar to the estimations.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.bcentral.cl/eng/studies/economia-chilen ... n1abr2012pp32-75.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:chb:bcchec:v:15:y:2012:i:1:p:32-75

Access Statistics for this article

Journal Economía Chilena (The Chilean Economy) is edited by Roberto Alvarez, Miguel Fuentes and Claudio Raddatz

More articles in Journal Economía Chilena (The Chilean Economy) from Central Bank of Chile
Contact information at EDIRC.
Series data maintained by Claudio Sepulveda ().