Labor Market Regimes and Mobility through a Markov Chain in Chile

Ricardo Paredes () and Victor Lima

No 317, Econometric Society 2004 Latin American Meetings from Econometric Society

Abstract: In this paper we analyze the dynamics of labor markets in Chile. Our goal is to understand how flexibility in the labor market has changed over time, and in particular, to relate this change with the legislation framework. We analyze mobility in four different periods, each of them associated with different labor regimes. Based on flows, we estimate transition probabilities across three relevant possible states: unemployment, employment, and out of the labor force. Our finding shows that since 1974 employment became less secure. The probability for an employed person of becoming unemployed almost doubled since 1974 and remained thereafter. Also, the probability of remaining unemployed increased from 26,1% in the period 1962-73, to over 40% in the periods 1974-79 and 1980-89, but felt to 25,6% after 1990. This in spite the average unemployment rate doubled between these two periods. The probabilities related with discourage and added worker effects were stable in the different periods considered, except since 1990, where the hypothesis of discouraged workers is challenged. Finally, whilst the natural rate of unemployment doubled after the reforms in 1974, it remained high until the last period, starting in 1990. Changes in participation compensated such changes, and hence, the expected length of unemployment did not increase dramatically in the period, remaining stable around two quarters

Keywords: labor markets; transition probabilities; unemployment. (search for similar items in EconPapers)
JEL-codes: J38 J63 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://repec.org/esLATM04/up.31674.1082416138.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: https://EconPapers.repec.org/RePEc:ecm:latm04:317

Access Statistics for this paper

More papers in Econometric Society 2004 Latin American Meetings from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().