The Okun’s Law and the labor flexibility in Mexico: A cointegration analysis, 1997Q3-2014Q1

Eduardo Loría Díaz de Guzmán (), Emmanuel Alejandro Ramírez Guerra and Emmanuel Salas
Additional contact information
Eduardo Loría Díaz de Guzmán: Universidad Nacional Autónoma de México
Emmanuel Alejandro Ramírez Guerra: Universidad Nacional Autónoma de México
Emmanuel Salas: Universidad Nacional Autónoma de México

Contaduría y Administración, 2015, vol. 60, issue 3, 631-650

Abstract: Because the labor flexibility has become an increasing condition in labor markets, we estimated the effect of labor flexibility on the unemployment rate in Mexico for 1997Q3-2014Q1. For this fact, we estimateda VECM (4) inspired on the Okun’s Law which includes a labor flexibility index, measured by the ratio of the temporary contracts to the total employees in the formal labor market. As expected by the Okun’sLaw (1962), we found a negative relationship between GDP and the unemployment rate. However, the most interesting result is that the labor flexibility index exhibits an increasing effect on the unemployment rate with an elasticity of 1.28.

Keywords: Labor flexibility; Okun’s law; Cointegration; Vector error correction; Cholesky ordering; Weak exogeneity (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cya.unam.mx/index.php/cya/article/view/755 (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: https://EconPapers.repec.org/RePEc:nax:conyad:v:60:y:2015:i:3:p:631-650

Access Statistics for this article

Contaduría y Administración is currently edited by Francisco López-Herrera (Editors in Chief)

More articles in Contaduría y Administración from Accounting and Management Contact information at EDIRC.
Bibliographic data for series maintained by Alberto García-Narvaez (Technical Editor) ().