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JEL Cl This study constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. We compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak. We also examine large, persistent increases in unemployment over time, finding that they are caused by contractions in aggregate demand. These demand contractions result from either disinflationary monetary policy or the defense of an exchange - rate peg in the face of capital flight. Our evidence supports hysteresis theories in which short - run changes in unemployment influence the natural rate.

Unemployment--Latin America--Econometric models. --- Unemployment--Econometric models. --- Caribbean Area. --- Exports and Imports --- Labor --- Taxation --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Monetary Policy --- Open Economy Macroeconomics --- Mobility, Unemployment, and Vacancies: General --- Unemployment: Models, Duration, Incidence, and Job Search --- International Investment --- Long-term Capital Movements --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Demand and Supply of Labor: General --- Labour --- income economics --- International economics --- Welfare & benefit systems --- Unemployment rate --- Capital outflows --- Social security contributions --- Labor markets --- Balance of payments --- Taxes --- Capital movements --- Social security --- Labor market --- Argentina --- Unemployment.

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This study constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. We compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak. We also examine large, persistent increases in unemployment over time, finding that they are caused by contractions in aggregate demand. These demand contractions result from either disinflationary monetary policy or the defense of an exchange-rate peg in the face of capital flight. Our evidence supports hysteresis theories in which short-run changes in unemployment influence the natural rate.