Arepas Are Not Tacos: On the Labor Markets of Latin America

María Aristizábal-Ramírez, Cezar Santos and Alejandra Torres

No 14256, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper examines labor markets across Latin American countries and documents large differences in labor market outcomes across these countries. Using comparable data for eight countries, we show that unemployment and informality act as substitute states and cluster countries into high-unemployment or high-informality groups. Labor market transitions vary systematically across these groups and help explain differences in employment dynamics. Embedding country-specific transitions in a simple model, we show that these differences have meaningful macroeconomic implications: countries with more volatile labor markets exhibit higher asset accumulation and greater consumption inequality. Moreover, heterogeneity in labor market transitions produces different effects on how taxation influences savings and inequality.

Keywords: Labor markets; Informality; Unemployment; Transitions (search for similar items in EconPapers)
JEL-codes: E24 E26 J46 O54 (search for similar items in EconPapers)
Date: 2025-08
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:14256

DOI: 10.18235/0013673

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