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Explaining High Unemployment in ECCU Countries

Author

Listed:
  • Ronald James
  • Jemma Lafeuillee
  • Mike Xin Li
  • Mr. Gonzalo Salinas
  • Yevgeniya Savchenko

Abstract

In recent years, unemployment rates in some ECCU countries have been among the highest globally. This paper evaluates several factors that could explain them, finding that high unit labor costs, in a context of strong unionization, are significantly associated with high structural unemployment, while the global crisis added a cyclical component. Our analysis also suggests that high-paid jobs in the public and tourism sectors, which have been growing considerably in recent decades, could have increased the reservation wage and lowered labor force participation. We find no indication that high structural unemployment is related to the phase out of EU preferences on bananas/sugar exports or to a skills mismatch. As expected, unemployment has been substantially, but only temporarily fueled by large natural disasters.

Suggested Citation

  • Ronald James & Jemma Lafeuillee & Mike Xin Li & Mr. Gonzalo Salinas & Yevgeniya Savchenko, 2019. "Explaining High Unemployment in ECCU Countries," IMF Working Papers 2019/144, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2019/144
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    References listed on IDEAS

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    3. Mr. Sebastian Acevedo Mejia, 2014. "Debt, Growth and Natural Disasters A Caribbean Trilogy," IMF Working Papers 2014/125, International Monetary Fund.
    4. Mr. A. E. Wayne Mitchell & Ronald James & Ann Marie Wickham, 2019. "Government Wage Bill Management and Civil Service Reform in the Eastern Caribbean Currency Union," IMF Working Papers 2019/110, International Monetary Fund.
    5. World Bank, 2005. "Organization of Eastern Caribbean States : Towards a New Agenda for Growth," World Bank Publications - Reports 8616, The World Bank Group.
    6. Lea Gimenez & Edwin St. Catherine & Jonathan Karver & Rei Odawara, 2015. "The Aftermath of the 2008 Global Financial Crisis in the Eastern Caribbean : The Impact on the St Lucia Labor Market," World Bank Publications - Reports 21602, The World Bank Group.
    7. Kim, Namsuk, 2007. "The impact of remittances on labor supply : the case of Jamaica," Policy Research Working Paper Series 4120, The World Bank.
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