Understanding the Paradox of the Labor Market

BRAZIL ECONOMICS - Report 26 May 2014 by Marcelo Gazzano, Cristina Pinotti and Affonso Pastore

There is a contrast in the Brazilian labor market: on the one hand, the unemployment rate has been holding steady at minimum historic levels, indicating a situation near full employment, while on the other hand new hiring has been growing at a pace near zero, indicating weakening. Indeed, the jobless rate measured in six metropolitan regions has been declining, reaching 4.6% in April, the lowest level in the series (which started in 2002), while the employed has not grown since the end of 2012 (Graph 1). The apparent paradox between these two situations is explained by the decline of the pa...

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