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dc.titleLabor Market and Macroeconomic Dynamics in Latin America Amid COVID: The Role of Digital Adoption Policies
dc.contributor.authorNuguer, Victoria
dc.contributor.authorFinkelstein-Shapiro, Alan
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageMexico
dc.coverageLatin America
dc.coverageLatin America
dc.date.available2022-04-29T00:04:00
dc.date.issue2022-04-29T00:04:00
dc.description.abstractWe study how policies that facilitate firm digital adoption shape the labor market and economic recovery from COVID-19 in a search and matching framework with firm entry and exit where salaried firms can adopt digital technologies and the labor market and firm structure embodies key features of Latin American economies. Using Mexico as a case study, we first show that the model quantitatively replicates the dynamics of the labor market and output at the onset of the COVID recession and in its aftermath, including the sharp decline in labor force participation and informal employment that is unique to the COVID recession. We then show that a policy-induced permanent reduction in the barriers to adopting digital technologies introduced at the trough of the recession bolsters the recovery of GDP, total employment, and labor income, and leads to a larger expansion in the share of formal employment compared to the no-policy scenario. In the long run, the economy exhibits a long-run reduction in total employment and labor force participation, but higher levels of GDP and labor income, greater average firm productivity, a larger formal employment share, and a marginally lower unemployment rate.
dc.format.extent42
dc.identifier.doihttp://dx.doi.org/10.18235/0004226
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Labor-Market-and-Macroeconomic-Dynamics-in-Latin-America-Amid-COVID-The-Role-of-Digital-Adoption-Policies.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectCoronavirus
dc.subjectSmall Business
dc.subjectLabor
dc.subjectDigital Technology
dc.subjectLabor Market
dc.subjectUnemployment Rate
dc.subjectLabor Force
dc.subjectInformation and Communication Technology
dc.subjectEconomy
dc.subjectLabor Force Participation
dc.subjectSelf Employment
dc.subjectInformal Labor
dc.subjectLabor Policy
dc.subjectDigital Policy
dc.subject.jelcodeE24 - Employment • Unemployment • Wages • Intergenerational Income Distribution • Aggregate Human Capital • Aggregate Labor Productivity
dc.subject.jelcodeJ23 - Labor Demand
dc.subject.jelcodeJ24 - Human Capital • Skills • Occupational Choice • Labor Productivity
dc.subject.jelcodeJ64 - Unemployment: Models, Duration, Incidence, and Job Search
dc.subject.jelcodeO14 - Industrialization • Manufacturing and Service Industries • Choice of Technology
dc.subject.keywordsBusiness cycles and labor search frictions;Self-employmentand informality;Unemployment;Labor force participation;Information and communications technologies (ICT);Latin America
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01333
idb.operationRG-K1320
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