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Job Finding and Separation Rates in an Economy with High Labor Informality

In: Workplace Productivity and Management Practices

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  • Nikita Céspedes Reynaga
  • Nelson R. Ramírez-Rondán

Abstract

Job finding and separation are not well studied in economies with high labor informality. In this chapter, we contribute to filling the gap in the literature of labor turnover, proposing a methodology to estimate both indicators in an economy with high informality. To this end, we estimate indicators of job finding and separation rates for Peru's developing economy, in which labor informality stands at 70%. We find that, on average, these indicators in the formal sector are similar to those estimated in developed economies; however, in the informal sector, the calculated indicators are approximately two times higher than those of the formal sector. The two indicators show considerable heterogeneity in the informal sector according to several observable categories; in addition, the separation rate is countercyclical, and the finding rate is procyclical, this cyclicality being greater in the formal sector.

Suggested Citation

  • Nikita Céspedes Reynaga & Nelson R. Ramírez-Rondán, 2021. "Job Finding and Separation Rates in an Economy with High Labor Informality," Research in Labor Economics, in: Workplace Productivity and Management Practices, volume 49, pages 277-302, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rleczz:s0147-912120210000049010
    DOI: 10.1108/S0147-912120210000049010
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    1. Madeira, Carlos & Salazar, Leonardo, 2023. "The impact of monetary policy on a labor market with heterogeneous workers: The case of Chile," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 4(2).

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    More about this item

    Keywords

    Job creation; job destruction; informality; job duration; business cycle; Peru; E24; E26; J63; J64; O17;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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