Participation in the Labor Supply in Latin America, 2000–2008

This paper analyzes the determinants of participation in the labor supply in a sample of ten Latin American countries. To this end, a VAR model is estimated with the variables economic growth, wages, unemployment and participation rate. A first section discusses the evolution and determining variables of participation rates in the Latin American countries, under the light of recent theories. This is followed by a review of recent literature on participation in Latin American countries. Next, impulse response functions are analyzed which permits to appreciate the role of economic growth, the real wage and the unemployment rate on participation. Further analysis is carried to appreciate the role of governance in the labor market. The paper ends with a discussion of the social policies related to labor markets.