The NAIRU and Informality in the Mexican Labor Market

Aguilar-Argaez Ana María, Alcaraz Carlo, Ramírez Claudia and Rodríguez-Pérez Cid Alonso
Authors registered in the RePEc Author Service: Claudia Ramirez Bulos and Carlo Alcaraz ()

No 2020-09, Working Papers from Banco de México

Abstract: The non-accelerating inflation rate of unemployment (NAIRU) is not directly observable and the presence of informal workers imposes an additional challenge in its estimation. Countries with large informal sectors, traditional measures might not depict labor slack properly, as it has the wage flexibility needed to incorporate formal workers that cannot find a formal job. In this paper, we present an estimation of the traditional NAIRU for Mexico and an alternative measure that includes informality as an indicator of labor underutilization. We find that both measures of NAIRU and the associated labor market slack indicators follow similar patterns over time. However, the slack estimated with the indicator that includes informality seems to predict inflationary pressures more accurately when the unemployment gap is close to zero.

Keywords: Unemployment; Informality; NAIRU; Business cycle (search for similar items in EconPapers)
JEL-codes: E26 E32 E52 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-iue and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.banxico.org.mx/publications-and-press/ ... -FF673267AF75%7D.pdf (application/pdf)

Related works:
Working Paper: The NAIRU and informality in the Mexican labor market (2022)
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:bdm:wpaper:2020-09

Access Statistics for this paper

More papers in Working Papers from Banco de México Contact information at EDIRC.
Bibliographic data for series maintained by Subgerencia de desarrollo de sistemas ().