Regional Labor Market

BRAZIL ECONOMICS - Report 06 Mar 2017 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

The average unemployment rate has been rising, but with important regional differences, which we will discuss in this note.

Since the later part of 2016, the growth of the unemployment rate in Brazil has been predominantly explained by the rise of the participation rate (more people looking for work), possibly as a result of deterioration of household income. But in the Northeast, this behavior has been different than the national average: the latest figures show that the participation rate fell from 57.5% in the middle of 2015 to 55.0% at the end of last year. If the participation rate had remained constant, the jobless rate in the Northeast in the last quarter of 2016 would have been just under 2 percentage points higher, reaching 17.4% instead of 15.6% (Graph 1). In the Southeast the situation is the opposite: the unemployment rate would have been just under 11%, rather than 13.3%, if the participation rate had remained constant at the end of 2016.

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