Economic Growth and the Chilean Labor Market

This article analyzes the Chilean labor market dynamics across different periods of economic growth. The evidence shows that the unemployment rate and job creation exhibit a marked synchrony with real GDP growth. Specifically, the unemployment rate falls and job creation accelerates in periods of strong economic growth. Moreover, the impact of growth on these labor market variables seems to be more pronounced in the case of young workers than for male and female workers. Regarding the quality of jobs, the evidence shows that a strong economic growth increases the participation of dependent jobs created in the private sectors but decreases self-employment. The former type of jobs exhibits higher wages and a stronger attachment to the social security and healthcare systems. Lastly, we show that, beyond the cyclical fluctuations of GDP, long-term economic growth has steadily increased female labor force participation. We provide a tentative explanation to understand this latter phenomenon.