Sectorial Economic Growth and Employment in Mexico, 1996-2001

Abstract

This paper shows the results from a study of the impact of sectorial economic growth on unemployment in Mexico for 1996-2001, by applying a disaggregate approach on data from the National Employment Survey (Encuesta Nacional de Empleo). The paper includes a discussion of the theoretical aspects of the sectorial contributions to growth (emphasizing the case of agriculture), as well as of the relationship between production and employment and the working of labor markets, but also describes the recent evolution of unemployment in Mexico. The core of the paper rests upon the analysis of panel data to estimate the open unemployment rate; it also includes the study of regional urban/rural growth through the analysis of unemployment in different sectors for ten different mexican regions. The results from the estimations at the regional level show that unemployment in Mexico has a statistically significant negative effect on sectorial economic growth. Also, evidence was found suggesting that promoting sectorial-regional (urban/rural) growth is an effective way to reduce unemployment. The paper, which is divided into five sections and draws upon some previous work on Okun’s law, also shows the impact that growth among economic activities within sectors has upon unemployment for the period.Sectorial Growth, Unemployment, Okun’s Law, Panel Data, National Employment Survey