UNEMPLOYMENT AND LABOR FORCE PARTICIPATION IN THE METROPOLITAN AREAS OF PORTO ALEGRE AND SALVADOR

ABSTRACT

This article aims to investigate the long-term relationships between unemployment and labor force participation in the metropolitan areas of Porto Alegre and Salvador from 1997 to 2014, using Johansen’s cointegration methodology. The research was conducted with data from the Employment and Unemployment Survey - the only in the country that allows working with quarterly time series for these two metropolitan areas throughout the study period. In the metropolitan area of Salvador, both aggregated and gender-segmented data showed long-term relationships between unemployment and labor force participation rate; whereas in the metropolitan area of Porto Alegre, such a relationship was found only for the female segment. Estimates of the cointegration vectors showed a direct relationship between unemployment and labor force participation in both metropolitan areas, denoting the occurrence of the added worker effect.

KEYWORDS:
unemployment; labor force participation rate; metropolitan labor markets