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Economic Reforms, Growth and Employment

Labour Markets in Latin America and the Caribbean

image of Economic Reforms, Growth and Employment

Labour conditions in Latin America and the Caribbean have long been a cause for concern. Despite relatively high economic growth rates, a large part of labour force was excluded from productive activities. This publication analyzes the evolution of Latin American and Caribbean labour markets in the 1990s and the impact of the economic reforms on them. The analysis makes it clear that the region faces a major challenge in the coming years, both in increasing the number of jobs and in improving job quality.

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Employment characteristics

Proponents justified the reforms theoretically on the grounds that changes in the production structure and within the sectors would foster demand for unskilled labour, since the countries of the region had a relative abundance of it. This, in turn, would lead to a narrowing of the wage gap between highand of low-skilled workers. It was similarly maintained that a widening of the wage gap in industrialized countries was to be expected, since market integration would accentuate the comparative advantages of production that was intensive in the use of capital, technology or highly skilled workers, while activities that make intensive use of lower-skilled workers would increasingly face foreign competition. The gap did widen in the industrialized countries, although there was no agreement on the extent to which this resulted from trade liberalization, technological change or other factors, such as the arrival of immigrants with low levels of education or changes in the framework of labour institutions, among them the weakening of union power.

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