The NAIRU and informality in the Mexican labor market

Ana Aguilar, Carlo Alcaraz Pribaz (), Claudia Ramírez and Cid Alonso Rodríguez-Pérez

No 1005, BIS Working Papers from Bank for International Settlements

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. 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)
Pages: 54 pages
Date: 2022-02
New Economics Papers: this item is included in nep-dev, nep-iue, nep-lab and nep-mac
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Related works:
Working Paper: The NAIRU and Informality in the Mexican Labor Market (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1005

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