| Abstract: |
Traditional labor market analysis based solely on the net unemployment rate
fails to explain the apparent paradox between a relatively moderate
unemployment rate in Peru (around 10%, with a weak sensibility to wide
macroeconomic fluctuations), and the fact that unemployment is one of the
major issues in Peru. One possible explanation is that this static indicator
of cross section net unemployment balance is compatible with high flows in and
out of employment states. To address these issues we needed to conduct a
dynamic analysis using panel data. Using the Peruvian national household
survey (ENAHO), we constructed a panel of working age individuals at the
national level for the period 1997-1999. Like previous work in developing
countries, we found that there is an important degree of job mobility in Peru.
We also found that most of the transitions occur between employment and
inactivity instead of between employment and unemployment. We also showed that
the rate of permanent unemployment is very low so that unemployment would be
essentially a frictional phenomenon. Further, considering the different
transition states, we elaborated an unconditional transition profile,
including individual and household characteristics, like gender, age and
education levels for example, associated with each transition status. Finally,
after examining these labor market transitions and the possible sample
selection bias, we estimated a multinomial logit model. This model allowed us
to appreciate the (conditional) incidence of individual and household
characteristics as well as the effects of different shocks on the labor
transition states. |