Cost of dismiss a worker in LAC

The figure below relates cost of dismiss a worker and correlation between unemployment and GDP in almost all countries in Latin America and Caribbean. We separate in three periods because we have cost regulation for years 1987, 1999 and 2009. As can be seen in all the periods, although not so clear, the higher the cost of dismiss a worker, the lower the correlation of unemployment and GDP. This suggests that employment protection mechanism is effective to protect employment of those already employed. The sad part of the story is that by making the labor market less flexible, leaves low skill young workers in the unemployment.

Cost of dismiss a worker and correlation of unemployment and GDP