Labor Force Participation in Chile: Recent Trends, Drivers, and Prospects

26 Pages Posted: 12 May 2017

See all articles by Patrick Blagrave

Patrick Blagrave

International Monetary Fund (IMF)

Marika Santoro

International Monetary Fund (IMF)

Date Written: March 2017

Abstract

Gains in labor force participation rates in Chile have slowed in recent years. We examine their determinants using a cohort-model analysis. Allowing for both age- and cohort-specific effects in the context of a seemingly unrelated regression equations (SURE) approach, we find that age factors play an important role in determining participation decisions, especially for males. For females, we find that strong positive time trends dominate the downward pressure from demographics, although those trends have recently dissipated. In addition, we find that both cohort effects and the business cycle shape participation decisions. Using our cohort-based analysis, we construct projections of participation rates, which suggest population aging will put downward pressure on labor inputs, and thus potential output, in coming years. Further increases in female labor force participation-supported by policies- could more than offset the downward pressure from demographics.

Keywords: Labor force participation, Chile, Women, Potential output, Labor supply, Aging, Labor force partipation, female labor force participation, potential output, Labor Economics Policies, Demographic Trends and Forecasts, Labor Force and Employment, Size, and Structure

JEL Classification: J08, J11, J21

Suggested Citation

Blagrave, Patrick and Santoro, Marika, Labor Force Participation in Chile: Recent Trends, Drivers, and Prospects (March 2017). IMF Working Paper No. 17/54, Available at SSRN: https://ssrn.com/abstract=2967393

Patrick Blagrave (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Marika Santoro

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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