Abstract

GARCIA, Luis Fernando  and  CRUZ, Moritz. Unemployment in Latin America: Labor Market Flexibility or Capital Accumulation?. Prob. Des [online]. 2017, vol.48, n.189, pp.33-56. ISSN 0301-7036.

Unemployment in Latin America fell substantially in 2000-2013, which, from the standpoint of conventional theory, would be the outcome of reforms designed to make the labor market more flexible. On the other hand, a post-Keynesian perspective would maintain that a dropping unemployment rate is due to rising capital accumulation. This paper aims to determine which of these theoretical visions is supported by the empirical evidence. The panel data results suggest that capital accumulation is the variable that explains the majority of the behavior of unemployment. The policy recommendation based on this evidence is to keep investment growing via instruments that stimulate effective demand.

Keywords : Unemployment; labor market; panel data; post-Keynesian theory; neoclassical theory.

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