Observations on the debate on full employment in Brazil

ABSTRACT

The article examines the evolution of employment and unemployment in Brazil, from 2000 to 2012. It uses, as theoretical references, the argument about involuntary unemployment made by Keynes, and studies on the relationship between the formal and informal sectors of the labor market carried out by authors connected to the Prealc. An econometric model, based on Keynes's employment function (which is based on the Principle of Effective Demand) reveals that employment is positively correlated with economic growth. Additional data show that despite the growth in occupation and in job formalization during the period, which caused unemployment rates to plummet to historically low figures, the Brazilian economy did not achieve full employment. According to the theoretical references adopted, this was largely because a sizable portion of the labor force remained underutilized.

Keywords:
Full employment; Brazilian labor market; Rate of unemployment in Brazil; Informal sector; Keynes' effective demand