Who pays? The distributional impacts of slowing economic growth in Latin American labor markets
After a decade of strong growth and notable poverty and inequality reduction, Latin America finds itself in a pattern of regional slowdown. What, if any, are the distributional impacts of the slowdown? We study over 6 million labor market transitions from Argentina, Brazil, Mexico, and Peru to analyze how urban employment dynamics have adjusted to fluctuations in growth over the past decade. In particular, we focus on adjustments to labor market transitions to see if certain transitions, such as movements from employment to unemployment or from formal to informal work, are more sensitive to changes in growth and if some types of workers are more vulnerable to these changes. The results suggest that the emerging economies in this study have not shown significant changes in labor market transitions during the current growth slowdown. However, exploiting a decade of panel data of quarter-to-quarter transitions, we identify some sensitivity of labor market transitions to changes in growth and find that workers in low income quintiles are more likely to experience negative labor transitions than workers in high income quintiles during low growth periods.
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