BIS paper estimates slack in Mexico’s informal labour market

The debate on private equity job creation reignites

Research published by the Bank for International Settlements outlines a method of estimating labour market slack in the presence of a large informal sector.

Ana Aguilar and co-authors study the case of Mexico, noting that the characteristics of the labour market might make the unemployment rate a poor measure of slack. The informal sector is unregulated, with very flexible wages, so it is able to absorb most of the people who lose their jobs in the formal labour market, the authors say.

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