Job Finding and Separation Rates in an Economy with High Labor Informality

• Published in: Workplace Productivity and Management Practices Vol. 49; pp. 277 - 302
• Main Authors: Reynaga, Nikita Céspedes, Ramírez-Rondán, Nelson R.
• Format: Book Chapter
• Language: English
• Published: United Kingdom Emerald Publishing Limited 2021
• Subjects: Demographic Economics/Trends; Economics; Labour Economics; job duration; informality; job destruction; business cycle; Job creation; Peru
• DOI: 10.1108/S0147-912120210000049010
• ISBN: 9781801176750; 1801176752
• ISSN: 0147-9121

Abstract Job finding and separation are not well studied in economies with high labor informality. In this chapter, we contribute to filling the gap in the literature of labor turnover, proposing a methodology to estimate both indicators in an economy with high informality. To this end, we estimate indicators of job finding and separation rates for Peru's developing economy, in which labor informality stands at 70%. We find that, on average, these indicators in the formal sector are similar to those estimated in developed economies; however, in the informal sector, the calculated indicators are approximately two times higher than those of the formal sector. The two indicators show considerable heterogeneity in the informal sector according to several observable categories; in addition, the separation rate is countercyclical, and the finding rate is procyclical, this cyclicality being greater in the formal sector.